Reg E Revisions Announced

Posted By: Elwood P. Dowd

Reg E Revisions Announced - 11/12/09 06:02 PM

Oh joy! Just in time for the holiday!

Reg E Revisions Article

For the serious minded: Link to FRB Announcement
Posted By: Kathleen O. Blanchard

Re: Reg E Revisions Announced - 11/12/09 06:11 PM

Well, I am thrilled!
Posted By: #Just Jay

Re: Reg E Revisions Announced - 11/12/09 06:15 PM

Now if we can just get the Closed End Lending and HELOC final rules before the end of the year, that would just make for the best holiday season ever! laugh

::yes, you read the snark tone correctly::c smirk
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/12/09 06:37 PM

Well I hate to say this, but this was a long time coming. While I can see the benefit to the customer and the bank of covering checks written by a customer (who wants their mortgage payment bounced because they are $1.50 short?) - charging a $39 fee for an ATM or debit card transaction that was $1.50 over the balance was just getting out of hand.

It was only a matter of time before stories of the $45.00 Latte would start circulating, and in light of the events of the last year, is anyone surprised?

ETA: I read another article where the Fed came out with this now for perhaps a couple of reasons:

1. To forstall another Congressional Act that might be more draconian.
2. To show that the Fed really is paying attention to consumer issues and that a separate agency isn't needed.

Time will tell if the strategy workes.
Posted By: AuditorK

Re: Reg E Revisions Announced - 11/12/09 07:12 PM

Am I correct that this not only applies to banks with automated overdraft programs, but even the banks that have someone manually decide every day which items to pay or return?
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/12/09 07:23 PM

From what I read, it only covers overdrafts created by ATM and Debit Card (thus the $45 Latte issue), but not for checks that are written by customers.
Posted By: #Just Jay

Re: Reg E Revisions Announced - 11/12/09 07:33 PM

And if the at the time of atm wd they were fine, but by the time they processed and the mortgage check got in first thus causing the atm wd to look like an OD, then... ???
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/12/09 08:09 PM

From page 53 of the final rule:

The Board recognizes that financial institutions and consumers have imperfect information as to the balance in the account at the time of the transaction. Financial institutions face operational limitations in processing transactions, and in tracking the consumer’s actual balance, because transactions may not be processed in real-time. Similarly, even if a consumer checked his or her balance prior to a transaction, the balance may not be updated, so the consumer may inadvertently overdraw his or her account on the belief funds are available.

On balance, the Board believes financial institutions are in a better position to mitigate the information gap by developing improved processing and updating systems, as they have in recent years, and as the Board expects they will continue to do over time.
******************************************
If your customer does this more than a few times, then close the account - or take away their ATM/Debit card. That's one way to mitigate the information gap.
Posted By: HappyGilmore

Re: Reg E Revisions Announced - 11/12/09 08:16 PM

Quote:
The Board recognizes that financial institutions and consumers have imperfect information as to the balance in the account at the time of the transaction


There is no reason that a consumer should have imperfect info...they control the checks written and ATM withdrawls...

talk about no accountability...
Posted By: Anonymous

Re: Reg E Revisions Announced - 11/12/09 08:50 PM

What they need to do is force merchants to send their transactions same day if they want to get their money. Any transactions not processed timely would then be subject to return.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/12/09 09:43 PM

We saw this huge run-up in advertisements and marketing campaigns to encourage people to use their Debit Card instead of cash or checks. Using the Debit Card to purchase piddly items such as a burger and fries, coffee-mocha-latte, your sandwhich at the cafeteria, or a pack of gum at a convenience mart was heavily marketed as "thee way" to go - be hip, be cool, yadda, yadda. (I know - these ads were mainly from VISA and Mastercard, but remember all of us evil bankers are thrown into the same bucket.)

Add to that, many institutions encouraged people to use their Debit Card (greater interchange fee income) with automatic sweepstakes entries, added bonus points - what-have-you.

And the Debit card IS a neat and convenient way to pay for purchases, but if you are going to use it that way, you really need to have about a $100 cushion in your account to avoid the pitfalls of maintenance fees and other forgotten deductions that reduce your balance.

Problem is - these cards were marketed as heavily to people that did not have that kind of cushion as it was to people that did. So was it really a surprise when people started hitting just below their account balance when swiping their card for those fries and a chance to win a sweepstakes?

As you sow, so shall you reap - I guess.

Now that the wild party (for both banks and consumers) seems to be just about over, I guess all of us will need to sober up - banks will need to be less exuburant with the fee programs, and consumers will need to learn how to budget and live within their means.
Posted By: #Just Jay

Re: Reg E Revisions Announced - 11/12/09 10:07 PM

Originally Posted By: Princess Rooney
... and consumers will need to learn how to budget and live within their means.


Or how about going back to regularly checking and balancing their checkbooks so they can be personally accountable for what they have, or don't have.

I cannot blame the banks here... no one pulls the debit card out of your wallet for you, no one hands it to the cashier for you, no one signs the receipt for you. You do. You are the sole reason you incur a fee. No other.
Posted By: buggs

Re: Reg E Revisions Announced - 11/12/09 10:09 PM

Originally Posted By: HappyGilmore
Quote:
The Board recognizes that financial institutions and consumers have imperfect information as to the balance in the account at the time of the transaction


There is no reason that a consumer should have imperfect info...they control the checks written and ATM withdrawls...

talk about no accountability...

We can complain all we want, but some banks have done some pretty raw things to consumers in the name of fee income. The problem is that some of us have simply taken advantage of consumers who don't pay attention their account balance or don't understand how ATMs or single-purchase debit card transactions work. Some of the OD charges I've read about for a few dollars in purchase made me ill, because I knew what was going to happen. And it did. And don't think Congress will back down just because the FRB issued a rule.

Under the new rules, if they don't opt-in, they won't be able to make their purchase. That means, they won't be able to get that cash late at night to cover an emergency, or pay for gas at a station in the middle of nowhere in western Kansas on a cold night. Then they'll blame the banks for not letting them get their money.

All I can say is that we better do a good job in explaining to customers why they might want to opt-in.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 11/12/09 10:18 PM

Quote:
If your customer does this more than a few times, then close the account - or take away their ATM/Debit card. That's one way to mitigate the information gap.


Poesy. Pure poesy. If we ever meet, tell me I owe you a beer. grin
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/12/09 10:22 PM

Originally Posted By: Ken_Pegasus
Quote:
If your customer does this more than a few times, then close the account - or take away their ATM/Debit card. That's one way to mitigate the information gap.


Poesy. Pure poesy. If we ever meet, tell me I owe you a beer. grin


You gonna pay for it with your Debit card? whistle
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/12/09 10:25 PM

Originally Posted By: Just Jay

I cannot blame the banks here... no one pulls the debit card out of your wallet for you, no one hands it to the cashier for you, no one signs the receipt for you. You do. You are the sole reason you incur a fee. No other.


Just think of us as financial bartenders. Sorry fella, you've had enough to drink already.
Posted By: Tigg

Re: Reg E Revisions Announced - 11/13/09 12:20 PM

Has anyone given any thought about what will happen when you have an offline situation? And VISA's offline limits?

How will this work?
Posted By: rlcarey

Re: Reg E Revisions Announced - 11/13/09 12:58 PM

Unless the customer has opted-in for overdraft services, the bank will be prohibited from charging any overdraft fees if the tranaction causes an overdraft.
Posted By: Tigg

Re: Reg E Revisions Announced - 11/13/09 01:28 PM

Thanks, Randy.

You can still return the item though, is that correct?

Thanks again.
Posted By: AuditorK

Re: Reg E Revisions Announced - 11/13/09 02:16 PM

How would you return a POS or ATM transaction?
Posted By: Tigg

Re: Reg E Revisions Announced - 11/13/09 02:30 PM

Don't mind me - it's Friday - and I'm losing my mind. crazy
Posted By: AuditorK

Re: Reg E Revisions Announced - 11/13/09 02:48 PM

No problem Tigg. I was just trying to figure out if I was missing something. smile
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/13/09 07:26 PM

Well - at least decoupled debit cards are not covered:

Page 30 & 31

Several commenters requested that the Board explicitly exclude decoupled debit transactions from the scope of transactions covered by the final rule. Decoupled debit cards are debit cards offered by institutions other than the account-holding institution that consumers use as they would any other debit card. Transactions for these cards originate as debit card transactions paid by the card issuer, but are received and processed by the account-holding institution as ACH transactions.

The final rule prohibits a financial institution that holds a consumer’s account from assessing a fee for paying an ATM or one-time debit card transaction. Accordingly, overdraft fees charged by the account-holding financial institution for a decoupled debit transaction processed via ACH are not generally subject to the opt-in requirement of the final rule. For clarity, new comment 17(b)-1.i states that § 205.17(b)(1) applies to ATM and one-time debit card transactions made with a debit card issued by or on behalf of the account-holding institution.
*************************

Brought to you by the Glass-Half-Full Department.
Posted By: West_Delta

Re: Reg E Revisions Announced - 11/13/09 09:05 PM

What is amazing to me is that this new Reg seems to cover ALL debit card transactions associated with checking accounts, NOT just those cards associated with an account that has a courtesy pay limit. This places banks in a very new and strange situation: in order to be able to charge for any debit card overdrafts, they must get the customer's approval to do so. I wonder if this was really the result they were after? There will be unintended consequences.
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/13/09 09:23 PM

Originally Posted By: West_Delta
I wonder if this was really the result they were after? There will be unintended consequences.


That is precisely the result they were seeking. The regulators are tired of hearing consumers moan about being pillaged by bankers. And even though the really abusive banks are a minority, the rest of the industry did let them get away with their fee-frenzy far too long.

Wait until August 15, when all those opt-ins fail to come in from existing customers and bankers have to deny all the overdraft junkies. There had better be a whole lot of backup in the customer call centers on Monday, the 16th!
Posted By: tyond

Re: Reg E Revisions Announced - 11/13/09 09:42 PM

I understand that Payroll cards would also be included in the 'opt-in' requirements if they assess an overdraft fee, is that correct?
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/13/09 09:47 PM

You've been reading ahead, haven't you, tyond?

Yes, that is correct.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/13/09 09:54 PM

So rather than going through the process of sending "Opt-Ins" to customers, if a bank decided it simply would reject these transactions and not charge a fee, it looks like they will need to send a "Change In Terms" notice under TISA to exclude those transactions from the type that can incur an OD or NSF Fee.

What fun.
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/13/09 09:59 PM

You betcha, Princess. It would be an interesting argument -- would discontinuing the application of OD fees to ATM and debit card transactions be a change that would "adversely affect the customer"? Not an argument I'd want to participate in. I'd say send the notice.
Posted By: DSZ

Re: Reg E Revisions Announced - 11/13/09 10:03 PM

Originally Posted By: Georgia Plum
What they need to do is force merchants to send their transactions same day if they want to get their money. Any transactions not processed timely would then be subject to return.


I totally agree. We have several customers that we took away their Overdraft limit completely either by request or by bank decision, but the accounts still go negative when the Pre-Authorized Hold doesn't complete within the three day period and we are forced to draw the account negative anyway.

I recently had a transaction that was debited almost two months after the preauthorization came through. There is no way to return the item like you can a check so you have to either A: Post the transaction to the account or B: Dispute and Pray (As my staff likes to say, looking at the number of rejected disputes from MasterCard with no additional chargeback rights, all he said she said and in the end the bank is held holding the loss).
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/13/09 10:30 PM

The card networks continue to work with 20th-century procedures. Yet I can take my card to the local grocery and use a PIN to pay, and the debit posts in the same time it would take an ATM withdrawal to hit the account. It's time for the big networks to modernize. It won't be long before it will take less time for my check to Merchant A to clear before my (signature) debit card payment to the same merchant.
Posted By: buggs

Re: Reg E Revisions Announced - 11/14/09 04:42 PM

Originally Posted By: Princess Rooney
Several commenters requested that the Board explicitly exclude decoupled debit transactions from the scope of transactions covered by the final rule.

Well, that's a little bit of good news at least.
Posted By: Irishguy

Re: Reg E Revisions Announced - 11/16/09 07:14 PM

Until today, I did not know anything about "decoupled debit cards." Could a bank outsource their debit cards to one of these issuers to avaide the new OD requirements? If possible, what are some of the pros and cons of considering this?
Posted By: Reed

Re: Reg E Revisions Announced - 11/16/09 07:43 PM

Here is my favorite line from the final rule:

“Due to various factors such as consumer inertia and the difficulty in anticipating future costs, consumers may end up with suboptimal outcomes even when given a choice. As some studies have suggested, consumers are likely to adhere to the established default rule, that is, the outcome that would apply if the consumer takes no action.”


I actually laughed outloud when I read that. So...not only are people to lazy to balance their checkbooks but also to call the bank to opt out? And that's the main reason for adopting the opt in stance? Wow....just, wow.
Posted By: waldensouth

Re: Reg E Revisions Announced - 11/16/09 07:52 PM

That's great! I think examiners are just acknowledging that folks don't read the stuff we send them! The opt-out is clearly stated in our welcome letter.
Posted By: Harvey

Re: Reg E Revisions Announced - 11/16/09 07:55 PM

We are one of the 24% of banks that do not offer a courtesy pay overdraft system. However, because we are not on a real time system (yet) a customer can make a withdrawal from the ATM, checks clear off the account during the day, so when we post the ATM transactions that night, there are not enough funds to pay the ATM transaction and it rejects. We manually pay the item into overdraft and charge the customer an overdraft fee. Then if the overdraft is not covered within 5 days, we automatically charge the customer an amount daily for being overdrawn. I am thinking under the new rules, the fee for paying the ATM withdrawal into overdraft cannot be charged AND the daily fee for the account being overdrawn can not be charged if the only thing that made the account go overdrawn was the paid ATM withdrawal.

Do you agree with my conclusions?
Posted By: Bullseye

Re: Reg E Revisions Announced - 11/16/09 07:56 PM

I agree that they could not be charged any fees for the overdraft, unless they have chosen to opt-in.
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 11/16/09 08:08 PM

There is an exception that states, "If a bank's policy is not to pay or allow ATM withdrawals or one-time debit card transactions if, at the time authorization is requested, the bank has a reasonable belief that the account has insufficient funds, then the notice and opt-in requirement do not apply."

Is anyone considering or already have this policy?
Posted By: NeverEndingSupport

Re: Reg E Revisions Announced - 11/16/09 08:09 PM

HappyGilmore, haven't you heard.... only bank's have to be accountable.
Posted By: Anonymous

Re: Reg E Revisions Announced - 11/16/09 08:20 PM

Harvey, maybe you need to check your posting priority on your system. We have the same thing that happens, however, we post ATM withdrawals first, then any checks that might come in. Then if funds are not there, check can be returned without creating overdraft.
Posted By: BrendaC

Re: Reg E Revisions Announced - 11/16/09 08:27 PM

Good suggestion, GP.

Harvey: Maybe by checks clearing during the day, you mean checks cashed at the bank vs. inclearings? You want your posting order to be something like: 1) deposits; 2) on us debits; 3) force pay items; 4) electronic debit items; and finally 5) inclearing checks.
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/16/09 09:07 PM

The banks that will really be disadvantaged are those that approve card transactions using an offline positive balance file and don't even know about them until they are posted.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/16/09 11:13 PM


I've aleady been asked the question - "Can we just include the Opt-In as part of the Account Agreement?"

**sigh**
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 11/16/09 11:15 PM

Princess,

Give the person that asked you the question the 93 page document and tell them to read it and let YOU know if it can be part of the Deposit Agreement. smile Ha!!
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/17/09 05:43 PM

The answer? On page 35 of the document, and in section 205.17(d) of the rule.

The disclosures must be segregated from other information not required or permitted to be included. The method for providing consent must be separate from other types of consents.

I will be slicing and dicing all of the provisions of the new rule in a January 6, 2010, webinar, "Overdrafts - New ATM and Debit Card Rules."
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/17/09 07:30 PM

Yeah - I already told them "No" unless they want to include the entire Model Form as part of their Account Agreement.

Just waiting to hear whether or not I'm still a "Team Player."

whistle
Posted By: Aggs

Re: Reg E Revisions Announced - 11/17/09 08:13 PM

This project has been assigned to me and it's already frustrating me. Not due to anything at the bank, but due to all the scenarios that I am coming up with in which the customers can continue to not pay attention and get their transactions covered without fees.

Don't get me wrong - I do agree with the pp in that too many banks charged too many fees and too many people were charged insane amounts of money for overdrawing their accounts for piddly transactions. BUT - there has to be some accountability left on consumers.

I'm working for a large institution now that has the means to update systems, etc., but my thoughts keep returning to my previous employers - small community banks that will end up getting the raw end of the deal on this one.

My proposed solution for instances where the card transaction posts after the initial balance has been depleted is:

1. If balance is depleted due to paper check transaction(s), return the checks as NSF and charge NSF fee(s) for each. Then post the card transactions.
2. If balance is depleted due to ACH debit(s), if we're within the timeframes to return it NSF, return it and charge NSF fee(s). If past the time deadline for returns, post all transactions, charge only for ACH.
3. If balance is depleted due to card purchases caused by merchant settlement delays, post all (obviously) without charging fees.

However, for any instance where we are forced to pay the OD without charging fees, I am proposing that we set a limit of 5 occurrences (or whatever number we settle on). This would be added to the account T&Cs and all appropriate disclosures. Upon the 4th occurrence, we send a notice to the customer letting them know that an additional overdraft created by an ATM or one-time debit card transaction will result in us closing their debit card and issuing an ATM card only. That way they can only do PIN-based transactions, which will post in real-time. If they want to keep the check card, they will (after the 5th occurrence) have to set up overdraft protection by either linking a savings account or applying for our OD line of credit we provide.

Anything blatantly wrong with my proposal? I have read the entire new rule numerous times and I don't see anything that would prohibit me from proposing such a solution (i.e. revoking check card privileges and switching to ATM card only).
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 11/17/09 08:31 PM

I think the push-back you may get is that the bank/CU still makes more money from the interchange fee on Signature transactions as opposed to PIN-based transactions.

In the end, banks/CUs will have to conduct a cost/benefit analysis of cutting off debit cards to reduce "free" overdrafts vs. the income they will lose from the interchange.
Posted By: tflower

Re: Reg E Revisions Announced - 11/17/09 08:51 PM

Originally Posted By: Dolly Nugent
There is an exception that states, "If a bank's policy is not to pay or allow ATM withdrawals or one-time debit card transactions if, at the time authorization is requested, the bank has a reasonable belief that the account has insufficient funds, then the notice and opt-in requirement do not apply."

Is anyone considering or already have this policy?


We have always had this policy.

We don't allow these types of overdrafts to occur and then charge for them...no bounce program here because we didn't believe it 'helped' the customer. Other banks laughed at us because we were not 'capitalizing on the fee income'.

Now, I'm thinking this exception is too good to be true. smile

Does this mean that we can still charge if they are overdrawn when the debit transaction clears providing we acted in good faith and there were sufficient funds in their account when the transaction was authorized??? Without an opt-in? (exception is on bottom of page 80)
Posted By: Aggs

Re: Reg E Revisions Announced - 11/17/09 08:55 PM

Originally Posted By: Princess Rooney
I think the push-back you may get is that the bank/CU still makes more money from the interchange fee on Signature transactions as opposed to PIN-based transactions.

In the end, banks/CUs will have to conduct a cost/benefit analysis of cutting off debit cards to reduce "free" overdrafts vs. the income they will lose from the interchange.


I agree. Plus, the more I think about it, my example of "5" is really low (which is why it was just an example, LOL). We'll have to decide on a lot of parameters to consider it - such as the amount of ODs, etc. I wouldn't want to cut off a customer's check card for overdrawing it $1.57 a few times. I might if they repeatedly overdraw it though for $157. I do think we have to do something though, because otherwise some people will really abuse it. A lot of people do take the time to educate themselves on bank laws if they know it can benefit them. So I think we should place some kind of a program in place to stop the "abusers".
Posted By: Aggs

Re: Reg E Revisions Announced - 11/17/09 09:04 PM

Originally Posted By: tflower
Originally Posted By: Dolly Nugent
There is an exception that states, "If a bank's policy is not to pay or allow ATM withdrawals or one-time debit card transactions if, at the time authorization is requested, the bank has a reasonable belief that the account has insufficient funds, then the notice and opt-in requirement do not apply."

Is anyone considering or already have this policy?


We have always had this policy.

We don't allow these types of overdrafts to occur and then charge for them...no bounce program here because we didn't believe it 'helped' the customer. Other banks laughed at us because we were not 'capitalizing on the fee income'.

Now, I'm thinking this exception is too good to be true. smile

Does this mean that we can still charge if they are overdrawn when the debit transaction clears providing we acted in good faith and there were sufficient funds in their account when the transaction was authorized??? Without an opt-in? (exception is on bottom of page 80)





Hmm, I am not finding anything that would allow you to charge without an opt-in. I read and re-read the exception on page 80 but all I am getting out of it (and correct me if I'm missing the point) is the exception to having to do the notice and opt-in. I don't see anything that would let you pay the OD and charge. If you have the policy in place to always decline, do you ever deal with ODs now? If you deal with them due to merchant posting delays, you'll have to have the same policy once this is effective, but I don't think you can charge (but I'm not sure...) What would happen if you posted a $4.00 lunch transaction that overdrew the customer by $3.00 and then hit them with a $29 OD fee? If the customer did some research, couldn't they complain that you're violating Reg E because they never opted in? But if you just don't ever run into situations like that and always decline everything, then I think you're ok.

Now I'm just confusing myself.
Posted By: tflower

Re: Reg E Revisions Announced - 11/18/09 04:02 PM

Thanks Mauraga...we are a bit confused also...that's why I'm throwing it out there for all you BOLers to comment...

Anyone else have any insight???? Pretty please??? smile
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/18/09 05:54 PM

Originally Posted By: tflower


Does this mean that we can still charge if they are overdrawn when the debit transaction clears providing we acted in good faith and there were sufficient funds in their account when the transaction was authorized??? Without an opt-in? (exception is on bottom of page 80)



NOTE: I am retracting this answer, and you'll see why below.

Yes, I believe you can, and you can apply that exception on an account-by-account basis.

If you have a policy and practice of declining to authorize and pay any ATM or one-time debit card transactions when you have a reasonable belief at the time of the authorization request that the consumer does not have sufficient funds available to cover the transaction, the requirements of §205.17(b)(1) do not apply.

In such a case, go back and read the regulation without paragraph 17(b)(1). The prohibition against charging a fee without an opt-in goes away.
Posted By: AuditorK

Re: Reg E Revisions Announced - 11/18/09 06:50 PM

But doesn't page 51 discuss the two proposed exceptions to the fee prohibition - one of which was that you would be able to charge a OD fee if the institution had a reasonable belief that sufficient funds were available when the transaction was authorized but weren't when the transaction settled? This proposed exception was not included in the final rule.

To me it seems that we can't charge a fee for this situation, regardless of whether we are a bank that declines transactions when funds aren't available. We would just be relieved of complying with the notice and opt-in requirements.

Confused as usual crazy
Posted By: ahou

Re: Reg E Revisions Announced - 11/18/09 08:19 PM

No AuditorK, you are correct. No notice, no opt-in....can't charge a fee. If your bank's policy & proc are set up to decline these trans and you do pay one, you're ok with notice & opt-in, but still can't chg a fee.
Posted By: ahou

Re: Reg E Revisions Announced - 11/18/09 08:27 PM

From the commentary to 17(b)(2)

2. No affirmative consent. A financial institution may pay overdrafts for ATM and one-time debit card transactions even if a consumer has not affirmatively consented or opted in to the institution’s overdraft service. If the institution pays such an overdraft without the consumer’s affirmative consent, however, it may not impose a fee or charge for doing so.

Also see pg 52 (bottom of pg) and the top of pg 53 of the preamble.
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/18/09 11:19 PM

This response deleted to omit incorrect information, based on receipt of clarification from Fed. -- JSB
Posted By: ahou

Re: Reg E Revisions Announced - 11/19/09 12:13 AM

So if the bank has a policy not to pay ATM and debit card transactions on any accounts - can ODP fees be assessed when the trans was below the merchant floor (where they don't get auth under a certain amt) and it overdraws an acct? We don't have control over this.
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/19/09 02:34 PM

My first reaction was to say no, because the element of an authorization isn't present. But now that I re-read the regulation, comment and supplemental information for the umpteenth time, I am not so sure. You could be right, ahou.

I have put out a feeler to the Fed, and will come back here with what I find out.
Posted By: tflower

Re: Reg E Revisions Announced - 11/19/09 06:34 PM

THANK YOU ALL for the conversation and to JOHN for approaching the Fed. I am very interested in their interpretation since we seem to be able to interpret it either way.
Posted By: Bobw

Re: Reg E Revisions Announced - 11/19/09 09:20 PM

Exactly, once folks start seeing the debit card purchase denied when they have a basket full of food at Walmart, that should be interesting? They will not be happy. Walmart will not either as they will have to put all back maybe? Well, I really would rather happy to see Walmart suffer...(my out loud voice)...
Posted By: JacF

Re: Reg E Revisions Announced - 11/20/09 07:18 PM

Originally Posted By: John Burnett
The card networks continue to work with 20th-century procedures. Yet I can take my card to the local grocery and use a PIN to pay, and the debit posts in the same time it would take an ATM withdrawal to hit the account. It's time for the big networks to modernize. It won't be long before it will take less time for my check to Merchant A to clear before my (signature) debit card payment to the same merchant.

In light of the new rules, it may be more cost effective for us to retrain our customers to use PIN based POS transactions, instead of the signature based transactions that we have been promoting for years.
Posted By: compliancegeek

Re: Reg E Revisions Announced - 11/25/09 02:34 PM

So, there is nothing in the Reg E rule or proposed legislation that restricts or otherwise prohibits charging a fee for returning an item - correct?
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/25/09 02:52 PM

That is correct. On the question of imposing a fee, however, for declining an authorization request for an ATM or debit card transaction, consider the following, quoted from page 34 of the Fed's 93-page Federal Register submission document:
Quote:
A few commenters suggested the possibility that financial institutions may create new fees for declining ATM or one-time debit card transactions. While the final rule does not address declined transaction fees, the Board notes that such fees could raise significant fairness issues under the FTC Act, because the institution bears little, if any, risk or cost to decline authorization of an ATM or one-time debit card transaction.
Posted By: Anonymous

Re: Reg E Revisions Announced - 11/27/09 03:53 PM

John, do you think that core providers are going to be ready by July 1 to be able to identify and systematically handle the fee/no fee, opt in/out? These systems don't have these fields today and the logic isn't there either.
Posted By: trout22

Re: Reg E Revisions Announced - 11/30/09 04:52 PM

With the last-minute delay on Reg GG, I'm hoping and praying for the same with Reg E. Our core provider hasn't even attempted (or considered) to make any changes yet - my understanding is that they are waiting to give the powers that be more time to consider the final (final, final) ruling, before they tackle such an issue. In the mean time, it makes it very difficult for us to consider P&P when we don't know what our system limitiations will be...
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/30/09 05:03 PM

Originally Posted By: John Burnett

I have put out a feeler to the Fed, and will come back here with what I find out.

Here's the scoop, from my source at the Fed:
  • The wording of the exception in .17(b)(4) is that the "requirements of § 205.17(b)(1) do not apply to an institution that has a policy and practice of declining ...."
  • It is intended that such an institution would, however, still be bound by the prohibitions in § 205.17(b)(1) against assessing an overdraft fee or charge.
  • Fed staff agrees that it needs to clarify how .17(b)(4) will work because the current wording can be misinterpreted, and will do so along with any other issues that need clarification.

So, while such institutions may not need to go to the effort of providing opt-in disclosures and forms or procedures with respect to applicable account products, they will have to, in my opinion --
  • cease imposing any fee or charge they might currently be imposing for ATM or one-time POS debits that might create an overdraft notwithstanding their attempts to prevent them at time of authorization
  • consider altering their posting priorities to ensure that ATM and debit card transactions post before other debit items on a given posting day
  • review and update if necessary their account disclosures under Reg DD §230.4(b)(4) as they relate to types of transactions that may result in an overdraft fee.
Posted By: John Burnett

Re: Reg E Revisions Announced - 11/30/09 05:10 PM

Originally Posted By: Georgia Plum
John, do you think that core providers are going to be ready by July 1 to be able to identify and systematically handle the fee/no fee, opt in/out? These systems don't have these fields today and the logic isn't there either.

I think that the key changes that will have to be made to systems is the ability to assess a fee or not based on the type of transaction. If the system can discriminate between ATM and POS debits on the one hand and ACH, check and internal debits (loan payments, transfers) on the other hand and base the fee decision on which group the transaction is in, you could manage the opt-in by assigning a separate class code or product code to accounts that have opted in.
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 11/30/09 05:16 PM

John is probably correct. Check your transaction code parameters. Each transaction code should enable you to indicate if a charge should apply.
Posted By: AuditorK

Re: Reg E Revisions Announced - 11/30/09 05:31 PM

John - thanks for obtaining the clarification from the Fed. Sadly, I liked your first answer better.
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 11/30/09 06:14 PM

On second thought, it’s probably not a good idea to mess with the transaction code parameters.

As John said, it would be nice if core providers can help us out with some enhancements that will automate this. Otherwise, we will be relying on our Operations Officers to make these decisions on a daily basis.

I can't wait to see the Fed's clarification on the exception language! smile I hope they intend to so this soon!
Posted By: West_Delta

Re: Reg E Revisions Announced - 11/30/09 08:00 PM

John,

I had read it the "other" way, and convinced myself that regulators' reasoning for allowing banks to charge for inadvertent debit card overdrafts when a customer did not have an overdraft limit was that this scenario would provide incentive for banks to NOT have customers in overdraft programs (perhaps an implicit aim of regulators). The wording as it is is convoluted on a good day.
Posted By: tflower

Re: Reg E Revisions Announced - 11/30/09 08:48 PM

Thanks John for the research and update.

Keep in mind though, that as with the Reg. GG rules, all is subject to change in the 11th hour.

Sure makes it difficult to "play by the rules" when the rules keep changing. frown
Posted By: dottiec

Re: Reg E Revisions Announced - 12/01/09 01:38 PM

John, Thanks for the Fed information.

Our bank does not authorize ATM or POS withdrawals that we know would create an overdraft. However, when they finally arrive, who knows. Do I understand the Fed to be saying the only way we could charge a fee for this type of overdraft is to go through the whole opt-in process?
Posted By: Phoenix

Re: Reg E Revisions Announced - 12/01/09 08:20 PM

I'm just starting to read through this proposal. If I understand it correctly, its focus is on fees charged for overdrafts, especially those caused by ATM and POS transactions. If someone has already arranged to link his/her DDA to a line of credit, and the institution has no bounce protection service, then does that institution need to do anything?

I saw that any opt-in disclosure needs to mention the availability of linking accounts, for any institution that offers that possibility.

Thanks, as usual....
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/04/09 03:10 AM

Just had a thought - if your directors have debit cards, you will either need to have them "Opt-in" or flat out refuse their transactions or risk having either a Reg. O or a Reg E violation.

Personally, I would take the hit on E rather than O.

And don't try to tell me that a director wouldn't overdraw his or her account with a debit card transaction.....
Posted By: rlcarey

Re: Reg E Revisions Announced - 12/04/09 03:20 AM

I'm not sure how these provision would have any impact on the current Reg. O limitations??? Could you explain?
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/04/09 06:34 PM

If a Director's Debit Card creates an overdraft, isn't the bank required to charge an Overdraft Fee under Regulation O? Therefore it would seem that any director that has a Debit Card would be required to "Opt In", but the revisions to Regulation E do not seem to allow such a requirement.
Posted By: Andy_Z

Re: Reg E Revisions Announced - 12/04/09 11:42 PM

BTW, John is teaching a webinar on this, in case you haven't seen it.

http://calendar.bollearningconnect.com/main.php?view=event&eventid=1258475828823
Posted By: West_Delta

Re: Reg E Revisions Announced - 12/08/09 01:38 PM

Princess Rooney, you raise a most interesting point!

WD
Posted By: John Burnett

Re: Reg E Revisions Announced - 12/08/09 01:52 PM

I think you could make a very cogent argument that if Regulation E prohibits the imposition of an overdraft fee in a given situation because the depositor has failed to opt-in, and that same requirement applies to all customers who have failed to opt-in, the director would not be receiving any preferential treatment, and there would not be a Reg O violation.
Posted By: river girl

Re: Reg E Revisions Announced - 12/09/09 06:15 PM

Originally Posted By: Irishguy
Until today, I did not know anything about "decoupled debit cards." Could a bank outsource their debit cards to one of these issuers to avaide the new OD requirements? If possible, what are some of the pros and cons of considering this?


I would like to know if this is being considered by any FI out there. What are the pros and cons?
Posted By: Aggs

Re: Reg E Revisions Announced - 12/09/09 06:51 PM

Originally Posted By: river girl
Originally Posted By: Irishguy
Until today, I did not know anything about "decoupled debit cards." Could a bank outsource their debit cards to one of these issuers to avaide the new OD requirements? If possible, what are some of the pros and cons of considering this?


I would like to know if this is being considered by any FI out there. What are the pros and cons?


My understanding of it is that it's not something that FIs offer or can consider. Target is leading the way in offering a Target-branded debit card that a customer links to their checking account.

https://redcard.target.com/redcard/content/rcw_benefits_debit

So it's not a product that we would offer our customers, it's a product offered by merchants that allows customers to link their checking accounts. It sounds risky, sure, but customers have to be approved to have one. All transactions clear the checking account via ACH debit (if I remember correctly).
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 12/09/09 08:25 PM

Arco and Shell are also offering these cards here on the west coast. Applications are at the pump. smile
Posted By: EdOils

Re: Reg E Revisions Announced - 12/11/09 08:45 PM

Quote:
If someone has already arranged to link his/her DDA to a line of credit, and the institution has no bounce protection service, then does that institution need to do anything?


217.17(a)(1)-(3) states that a Reg Z Line of Credit (LOC), transfer from another deposit account and a non-Reg Z LOC are exempt from the definiton of an "overdraft service". So you are correct, opt-in is not required.
Posted By: EdOils

Re: Reg E Revisions Announced - 12/11/09 09:20 PM

It's easy to say, "People should be responsible" or "We'll just return everything" or "Banks are bad for charging for this service", etc. It's also easy to talk about that "$40 Latte" (which happens less than the Gub'mint would lead you to believe).

Yes, there are some institutions that have taken it to the extreme, but there is an obvious need for the service. That is where you should focus your energy. How do we provide a benefit to our customers and how do we get compensated fairly for offering this product? I don’t know about you, but I don’t work for free.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/11/09 09:34 PM

I envision a compromise where institutions will offer the OD service for Debit Cards, but offer to cover the OD at no expense up to a certain dollar amount of overdraft. Pick your own poison there.

For those that don't opt-in, transactions would be refused even if the balance is only short by $0.01.

You're still going to pick up your interchange fee on that $5 latte, but you aren't royally ticking off your customer by charging them $30 on top of the $4.99 overdraft. And you can go back to being the "friendly" bank whose got your customer's back.


BTW - the "gubmint" did this because a LOT of PEOPLE got royally ticked off about this - and I'm not talking just your typically whining deadbeats. As a note of caution, tell your merchanic, hairdresser or bartender that you work for a bank at your own peril!
Posted By: EdOils

Re: Reg E Revisions Announced - 12/11/09 10:24 PM

This is off subject, but I'm proud to work for a financial institution. I see that "complaint" as an opportunity to talk about other ways to manage their money – ways to avoid the embarrassment of declining the transaction at a much lower cost. (Yes, Virginia, they do exist.) If they listen, cool. If not, that’s cool too, but at least I tried. Isn’t that what being a “friendly banker” is all about?

All I’m trying to say is that there has to be some middle ground out there - a way to provide your customer a service that they want at a reasonable price. The rules to the game have changed. That change will bring innovation. Those that seize the opportunity will reap the rewards.

Isn’t it an interesting time to be a banker?
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/11/09 11:24 PM

Famous Chinese curse:

May you live in interesting times.


I guess the thing that gets me is when I hear folks in banking crying over this rule. We all knew it was coming, but oh those ODP fees were so seductive.....

I think I said in an earlier post that both banks and consumers have to clean up after the wild party they were having for a few years.
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 12/14/09 07:59 PM

This information was sent to California Bankers Assn members today:
Clarification on Regulation E Overdraft Rule “Exception”

A number of banks have inquired about how the exception under the Federal Reserve Board’s new Regulation E rule applies. The rule requires banks to provide customers with an opportunity to opt-in to overdraft services related to ATM and one-time POS transactions. Without such an election, the bank may not charge overdraft fees on these transactions. But if a bank does not have a policy or practice of allowing overdrafts with respect to these transactions, then it is exempt from the rule. The language of the rule suggests that such an institution would be permitted to charge an overdraft fee in the absence of an opt-in election in certain situations, for example, when intervening items deplete an account before a previously authorized card transaction is settled. It would appear that the exception could not refer only to the obligation to provide the opt-in notice. If the bank does not allow overdrafts, there’s nothing to opt-in to, so the “exception” would be meaningless unless it refers to the ability to charge a fee in specific situations. However, staff at the Federal Reserve Board in private correspondence is indicating that this is not the Fed’s view, and it intends to release an official clarification soon.
Posted By: E.E.G.B

Re: Reg E Revisions Announced - 12/14/09 09:07 PM

That's what they said in the teleconference last week too.
Posted By: John Burnett

Re: Reg E Revisions Announced - 12/14/09 10:03 PM

With all due respect to the Fed Staff and attorneys, they had plenty of time to ensure that the plain language of the regulation said what they intended it to say. In fact, the plain language says almost exactly the opposite of what they apparently intended. I don't know how they managed to miss this significant detail, but they dropped the ball on it, IMO.
Posted By: West_Delta

Re: Reg E Revisions Announced - 12/14/09 10:31 PM

And John, to your point, what they stated in plain language seems to make much more sense than what they apparently intended. I suspect that if they revise, they will increase rather than eliminate the level of confusion and complexity.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/14/09 10:40 PM

When I first read the exception, I thought perhaps the Fed was throwing a bone to those banks and credit unions that didn't jump onboard the ODP Fee Train so that if they would normally refuse a transaction but got hit with an inadvertent overdraft they could charge a fee.

And while that sounds tempting, I think it would be too easily abused. What I am thinking is that the Fed originally intended to throw that bone and then realized the floodgates that might have opened.

Who would have thought that Emily Litella would be the new face of the regulatory agencies?
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 12/15/09 10:08 PM

Well, the Fed really screwed up on this one. It's right there in black and white "the requirements of 205.17(b)(1) do not apply to an institution that has a policy of declining to authorize....."

I listened to the audio of the Fed's Outlook Live Audio Conference. One of the callers was trying to get Dana Miller to answer how a bank that has a policy of not authorizing or paying would go about crafting an opt-in notice so that they COULD assess fees if/when at settlement there are insufficient funds. It was apparent to me that she did not understand the point this man was trying to make. smile

My observation after listening to the Outlook Live Audio and another webinar by a law firm her in CA is that banks that offer the "ODP Service" programs need to send opt-out notices. If they are lucky enough to get customers to opt-in, they can assess overdraft fees.

Those of us that decline to authorize or pay are prohibited from ever assessing a fee unless the FRB recognizes that they are in conflict with their own rules.
Posted By: John Burnett

Re: Reg E Revisions Announced - 12/16/09 02:27 PM

Dolly -- I'd be very careful about sending out an "opt out" notice. What current (pre 7/1/10) depositors must receive is essentially an expiration notice:

"After August 15, 2010 we will not authorize and pay overdrafts for ATM and everyday debit card transactions unless you ask us to (see below)."

If you attempt to couch your notice in terms of an opt-out, you're sending the wrong message. The consumer might believe that if he does nothing the standard overdraft service will continue. That's simply not the case. If you don't get an opt-in from these customers, you have to stop assessing fees for overdrafts by ATM or one-time debit card transactions as of 8/15/2010, and in virtually every case that will mean that the bank will stop authorizing such transactions when they would overdraw the account.

Technically, you probably could have a standard overdraft service for ATM and one-time debit card transactions that declines authorization requests for transactions that would overdraw an account, but charges a fee for transactions that post notwithstanding the bank's attempts to prevent ATM and debit card initiated overdrafts. But you would have to obtain an opt in to impose such fees, and no consumer with half a brain would opt in under those circumstances (if he or she realizes the bank would still have to pay the item).

Candidly, I believe that the Fed will publish technical amendments to the final rule to make it state what the Fed thought it said in the first place -- no opt-in means no fees. My cynical half believes the Fed wasn't ready to release the final rule but rushed to get it published to try to fend off some of the more drastic legislative proposals being considered in the House. So some of the housekeeping, such as cleaning up loose ends and saying what you mean, didn't get finished.
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 12/16/09 06:36 PM

Hi John,

Yikes!! I see that I said "opt-out" in my message. I meant "opt-in." ) Sorry for the confusion. We have no intention of sending an "opt-out" notice.

And I agree. No consumer in their right mind is going to opt-in!!
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/16/09 06:46 PM

So to boil it down to a few bullet points:

Banks that do NOT have a Courtesy Pay Program, or do NOT include Debit Cards &/or ATM withdrawals in its Courtesy Pay Program:

• You do not have to send an Opt-In Notice to existing accounts or provide one to New Accounts on or after July 1, 2010.

• You will not be able to charge a fee for any inadvertent Overdrafts from one-time Debit Card &/or ATM withdrawals after July 1, 2010 for new accounts opened on or after.

• You will not be able to charge a fee for any inadvertent Overdrafts from one-time Debit Card &/or ATM withdrawals after August 15, 2010 for existing accounts opened prior to July 1, 2010.

• You can refuse those transactions that would overdraw the account (subject to processing system limitations.)


Banks that DO have a Courtesy Pay Program, or DO include Debit Cards &/or ATM withdrawals in its Courtesy Pay Program:

• You must send an Opt-In Notice to accounts that were opened prior to July 1, 2010. If you do not receive the Opt-In, you cannot charge an Overdraft fee for those transactions after August 15, 2010.

• You must provide an Opt-In Notice to accounts that are opened prior on or after July 1, 2010. If the consumer does not opt-in, you cannot charge an Overdraft fee for those transactions at all.


• If the consumer has not opted in, you can refuse those transactions that would overdraw the account (subject to processing system limitations.)


CAVEATS:
If your TISA fee disclosure states that Overdraft fees may be imposed for overdrafts “created by check, in-person withdrawal, ATM withdrawal, or other electronic means", you may need to modify this language.

You cannot offer a more attractive account offer to induce people to opt-in other than the pricing or features for the Overdraft feature on one-time Debit Card and ATM withdrawals.
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 12/16/09 06:54 PM

That pretty much sums it up Princess Rooney!
Posted By: Compliance504

Re: Reg E Revisions Announced - 12/16/09 09:40 PM

Princess,

Thanks for the summary and I think I got it (key word being think).

We do not have an ODP and decline transactions at ATMs and one time debits that would overdraw an account.

Without giving an opt-in will we still be able to charge an overdraft fee when the overdraft was due to a debit hold?

I read that proposal did not make it into the final rule.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/16/09 09:51 PM

I don't believe you can charge an OD fee due to a debit hold that results from a one-time debit card transactions.

Having said that, I do believe that if a check, recurring debit or other ACH debit comes in and the account has an insufficient balance due to the debit hold, you can charge the NSF or OD fee on the non-debit card/non-ATM item.

Posted By: Steve Doty

Re: Reg E Revisions Announced - 12/17/09 04:12 PM

Originally Posted By: Princess Rooney
So to boil it down to a few bullet points:

Banks that do NOT have a Courtesy Pay Program, or do NOT include Debit Cards &/or ATM withdrawals in its Courtesy Pay Program:

• You do not have to send an Opt-In Notice to existing accounts or provide one to New Accounts on or after July 1, 2010.

• You will not be able to charge a fee for any inadvertent Overdrafts from one-time Debit Card &/or ATM withdrawals after July 1, 2010 for new accounts opened on or after.

• You will not be able to charge a fee for any inadvertent Overdrafts from one-time Debit Card &/or ATM withdrawals after August 15, 2010 for existing accounts opened prior to July 1, 2010.

• You can refuse those transactions that would overdraw the account (subject to processing system limitations.)



Princess Rooney,

I think I am need of some clarification. You are seperating out a bank with a "program" vs a bank with "no program". When I see the word "program" I think of an overdraft pay feature is that is promoted. I do not recall where the regulation makes a distinciton between the two. The definition of overdraft services is provided in the regulation and it states:

Overdraft Service:
Means a service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account.
The term “overdraft service” does not include:
(1) A line of credit subject to the Federal Reserve Board’s Regulation Z (12 CFR part 226), including transfers from a credit card account, home equity line of credit, or overdraft line of credit;
(2) A service that transfers funds from another account held individually or jointly by a consumer, such as a savings account; or
(3) A line of credit or other transaction exempt from the Federal Reserve Board’s Regulation Z (12 CFR part 226 pursuant to 12 226.3(d).


Majority of the banks charge overdraft fees (I say majority, because there is an eception somewhere (Policy for ATM & one time debits...LOL). So therefore the new opt-in requirements appy to all, not just those banks who have a "program". If it was the case where the requirements did not apply to banks with out a program then the 2nd and 3rd bullet points would be a mute issue.

Your thoughts would be greatly appreciated.

Thanks!
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/17/09 06:30 PM

I was attempting to clarify the snaafu regarding banks that routinely charge OD fees (i.e. they have a Courtsey Pay Program, ODP Program or whatever you want to call it) vs. those that have a manual review process for paying items and do not routinely pay one-time debit card and ATM Withdrawals if there are insufficient funds.

For purposes of the "Opt-in" requirement, it doesn't matter if your bank "advertised" the program or not. Frankly, the distinction between institutions that "advertised" or "actively promoted" the Courtesy Pay program has basically been eliminated now that we all have to show monthly and year-to-date OD and NSF fees on statements.

The Fed had stated that a Bank that does not routinely pay overdrafts on one-time debit card and ATM withdrawals were not subject to the requirements, and everyone thought that meant they did not have to send the opt-out and they could still charge a fee for those inadvertent OD's when the account had sufficient funds at time of authorization.

Turns out, for those banks that don't routinely pay overdrafts still can't charge a fee, but they don't have to send out the Opt-In since there is no program to Opt into.
Posted By: Happy

Re: Reg E Revisions Announced - 12/17/09 06:35 PM

I am hesitant to post this but here goes: blush If you have an account that has a ACH transaction, 2 checks and 1 ATM transaction hit the account on the same day, what caused the overdraft? Can you charge the account for the overdraft per the new Reg. change? I must be missing something but I don't know how you determine if the ACH, checks or the ATM transaction caused the account to be overdrawn.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/17/09 06:39 PM

Originally Posted By: ArrowHead
Princess Rooney,

I think I am need of some clarification. You are seperating out a bank with a "program" vs a bank with "no program". When I see the word "program" I think of an overdraft pay feature is that is promoted. I do not recall where the regulation makes a distinciton between the two. The definition of overdraft services is provided in the regulation and it states:

Overdraft Service:
Means a service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account.
The term “overdraft service” does not include:
(1) A line of credit subject to the Federal Reserve Board’s Regulation Z (12 CFR part 226), including transfers from a credit card account, home equity line of credit, or overdraft line of credit;
(2) A service that transfers funds from another account held individually or jointly by a consumer, such as a savings account; or
(3) A line of credit or other transaction exempt from the Federal Reserve Board’s Regulation Z (12 CFR part 226 pursuant to 12 226.3(d).


Majority of the banks charge overdraft fees (I say majority, because there is an eception somewhere (Policy for ATM & one time debits...LOL). So therefore the new opt-in requirements appy to all, not just those banks who have a "program". If it was the case where the requirements did not apply to banks with out a program then the 2nd and 3rd bullet points would be a mute issue.

Your thoughts would be greatly appreciated.

Thanks!



I realized that you were looking at the wrong section of the regulation. My distinction was based on this item:


§ 205.17 Requirements for overdraft services.
(b) Opt-in requirement.
(4) Exception to the notice and opt-in requirements. The requirements of § 205.17(b)(1) do not apply to an institution that has a policy and practice of declining to authorize and pay any ATM or one-time debit card transactions when the institution has a reasonable belief at the time of the authorization request that the consumer does not have sufficient funds available to cover the transaction. Financial institutions may apply this exception on an account-by-account basis.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/17/09 06:44 PM

Originally Posted By: Happy
I am hesitant to post this but here goes: blush If you have an account that has a ACH transaction, 2 checks and 1 ATM transaction hit the account on the same day, what caused the overdraft? Can you charge the account for the overdraft per the new Reg. change? I must be missing something but I don't know how you determine if the ACH, checks or the ATM transaction caused the account to be overdrawn.


I believe this was discussed earlier in the thread. I believe each institution will need to establish a "posting" order for items and pay debit card transactions before ACH and checks. You will need to do this consistently.
Posted By: Steve Doty

Re: Reg E Revisions Announced - 12/17/09 07:11 PM

Originally Posted By: Princess Rooney
Originally Posted By: ArrowHead
Princess Rooney,

I think I am need of some clarification. You are seperating out a bank with a "program" vs a bank with "no program". When I see the word "program" I think of an overdraft pay feature is that is promoted. I do not recall where the regulation makes a distinciton between the two. The definition of overdraft services is provided in the regulation and it states:

Overdraft Service:
Means a service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account.
The term “overdraft service” does not include:
(1) A line of credit subject to the Federal Reserve Board’s Regulation Z (12 CFR part 226), including transfers from a credit card account, home equity line of credit, or overdraft line of credit;
(2) A service that transfers funds from another account held individually or jointly by a consumer, such as a savings account; or
(3) A line of credit or other transaction exempt from the Federal Reserve Board’s Regulation Z (12 CFR part 226 pursuant to 12 226.3(d).


Majority of the banks charge overdraft fees (I say majority, because there is an eception somewhere (Policy for ATM & one time debits...LOL). So therefore the new opt-in requirements appy to all, not just those banks who have a "program". If it was the case where the requirements did not apply to banks with out a program then the 2nd and 3rd bullet points would be a mute issue.

Your thoughts would be greatly appreciated.

Thanks!



I realized that you were looking at the wrong section of the regulation. My distinction was based on this item:


§ 205.17 Requirements for overdraft services.
(b) Opt-in requirement.
(4) Exception to the notice and opt-in requirements. The requirements of § 205.17(b)(1) do not apply to an institution that has a policy and practice of declining to authorize and pay any ATM or one-time debit card transactions when the institution has a reasonable belief at the time of the authorization request that the consumer does not have sufficient funds available to cover the transaction. Financial institutions may apply this exception on an account-by-account basis.



Thanks, for the response. It was how i was interpreting your post. I believe we are on the same page. Just explaining it differently. I also noted the exception in my previous post. Thanks
Posted By: Double U

Re: Reg E Revisions Announced - 12/17/09 10:57 PM

Could someone give me a little more clarification on what the Fed is meaning by "one time debit card transaction"?

Thanks
Posted By: 'Lil Freak!

Re: Reg E Revisions Announced - 12/18/09 12:24 AM

Going to Target, Best Buy, etc. and trying to make a purchase as opposed to having a recurring monthly charge (gym membership, life insurance, etc.) that had previously been established.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/18/09 12:25 AM

One-time as opposed to recurring.

One time: You swipe your debit card to buy that non-fat double shot mocha latte.

Recurring: You (in a moment of insanity) give your debit card number to the fitness gym so you could get the first 3 months for only $9.00 (not that you're any more likely to go to the gym anyways) and they'll happily zap your card for $20.00 a month after the first 3 months from now until the sun goes nova (or you close your account.)
Posted By: Double U

Re: Reg E Revisions Announced - 12/18/09 03:06 PM

Thanks Freak & Princess!
Posted By: AuditorK

Re: Reg E Revisions Announced - 12/18/09 03:24 PM

Originally Posted By: Princess Rooney
Originally Posted By: Happy
I am hesitant to post this but here goes: blush If you have an account that has a ACH transaction, 2 checks and 1 ATM transaction hit the account on the same day, what caused the overdraft? Can you charge the account for the overdraft per the new Reg. change? I must be missing something but I don't know how you determine if the ACH, checks or the ATM transaction caused the account to be overdrawn.


I believe this was discussed earlier in the thread. I believe each institution will need to establish a "posting" order for items and pay debit card transactions before ACH and checks. You will need to do this consistently.


Is changing our posting order something that is required to be disclosed to our customers?
Posted By: Deena

Re: Reg E Revisions Announced - 12/18/09 04:04 PM

I apologize if this has already been asked and answered, but does anyone know if both owners of a joint account would have to opt in or if one could opt in for the account?
Posted By: West_Delta

Re: Reg E Revisions Announced - 12/18/09 04:50 PM

I recently reviewed the Fed's Outlook Live podcast from December 10th, which I recommend to anyone who hasn't already done so. The link is:

http://www.philadelphiafed.org/podcasts/player-outlook.cfm?file=outlook-live%2Foutlooklive_1209.mp3&title=Outlook%20Live%20Conference%20Call

There is one exchange that amazes me. At around the 29:10 mark, a banker asks a question about charging fees for inadvertent overdrafts that might occur even in a "return and charge" environment. The regulator's response was "we did not contemplate" this scenario.

Later in the call, the regulator acknowledges that, loosely paraphrased, "bankers deal with imperfect information all the time", and that "this is another one of those instances". She is correct. We do regularly deal with imperfect information. Imperfect information introduces risk, and the key way we deal with risk is with PRICE. So, in essence, when the price mechanism is no longer available (that is, we cannot charge for the inadvertent overdraft), our reaction will be to withdraw the service (the debit card) since we can no longer price according to level of risk. So potential customers are more apt to get a re-loadable stored value card from Wal-Mart than deal with a bank. And the banking industry becomes even more irrelevant.
Posted By: Deena

Re: Reg E Revisions Announced - 12/18/09 06:44 PM

Originally Posted By: Deena
I apologize if this has already been asked and answered, but does anyone know if both owners of a joint account would have to opt in or if one could opt in for the account?


I found my own answer - any one owner can opt in and any one owner can subsequently revoke the opt-in.
Posted By: John Burnett

Re: Reg E Revisions Announced - 12/18/09 08:32 PM

Originally Posted By: West_Delta
I recently reviewed the Fed's Outlook Live podcast from December 10th, which I recommend to anyone who hasn't already done so. The link is:

http://www.philadelphiafed.org/podcasts/player-outlook.cfm?file=outlook-live%2Foutlooklive_1209.mp3&title=Outlook%20Live%20Conference%20Call

There is one exchange that amazes me. At around the 29:10 mark, a banker asks a question about charging fees for inadvertent overdrafts that might occur even in a "return and charge" environment. The regulator's response was "we did not contemplate" this scenario.

Later in the call, the regulator acknowledges that, loosely paraphrased, "bankers deal with imperfect information all the time", and that "this is another one of those instances". She is correct. We do regularly deal with imperfect information. Imperfect information introduces risk, and the key way we deal with risk is with PRICE. So, in essence, when the price mechanism is no longer available (that is, we cannot charge for the inadvertent overdraft), our reaction will be to withdraw the service (the debit card) since we can no longer price according to level of risk. So potential customers are more apt to get a re-loadable stored value card from Wal-Mart than deal with a bank. And the banking industry becomes even more irrelevant.


I think you may be overreacting a bit. The only customers a bank might need to pull a card away from are those that don't opt in and more than occasionally force the bank to pay an OD card transaction. The vast majority of bank customers, who don't overdraw their accounts, should still be able to have their debit card access.

It's always a mistake to make sweeping statements or sweeping decisions that affect a whole group when only a few cause the troubles. It's a mistake when regulators and Congress punish an entire industry for the sins of the few, and it's also a mistake, I think, to pull the plug on a product based on losses caused by a few errant customers.
Posted By: La. Lady

Re: Reg E Revisions Announced - 12/18/09 09:13 PM

Originally Posted By: EdOils
Quote:
If someone has already arranged to link his/her DDA to a line of credit, and the institution has no bounce protection service, then does that institution need to do anything?


217.17(a)(1)-(3) states that a Reg Z Line of Credit (LOC), transfer from another deposit account and a non-Reg Z LOC are exempt from the definiton of an "overdraft service". So you are correct, opt-in is not required.


What about the bookkeeper who sits behind the desk and decides what to pay and what not to pay..... Will that depend on the posting order?
Posted By: West_Delta

Re: Reg E Revisions Announced - 12/18/09 09:35 PM

Thanks John for your reasoned reply. While I didn't state it in my earlier post, I was thinking within the context of offering a "second chance" account, where the risk level is somewhat higher than the average DDA, but where we also see significant value in furnishing debit cards as part of the account. Unless we can mitigate the inherent added risk, convincing banks to offer debit cards to these customers will be a tougher sell now.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 12/19/09 07:42 AM

All of this hullabaloo makes me wonder - what all did we do BEFORE we started charging OD fees on debit cards? It really wasn't all that long ago.

I'm beginning to think that these OD fees on debit cards were like crack - to both banks and customers that grew dependent on them.

Banks (and I must include Credit Unions here) loved, loved, loved the increased fee income with no apparent thought about how sustainable it was. Fee income from Overdrafts AND interchange. Sweet!

And careless customers just living in the moment loved, loved, loved that they could pull out a piece of plastic and buy whatever tempting item-du-jour was inexorably calling that siren call to BUY ME NOW!!!! and not worry about paying for it later. Again, no apparent thought (or care) about sustainability.

So now the Gubmint has stepped in with a JUST SAY NO program to financial crack and the cries of withdrawal are starting. Wait until consumers start having their debit cards reject at Walmart or the movie theater. The anguish will no doubt be blogged far into the night.

Sorry - it's late and I just spent a week slogging through recent mortgage files looking for ETILs and subsequent ETILS along with all of the other mass mess of documents that pile up in a mortgage file that has been assembled and re-assembled according to whatever investor is buying the darn thing - and of course the order of paperwork makes no logical sense - well not to me at least. Who puts the final TIL at the bottom of the file and the GFE 3 pages down from the top..... and the entire file measures a good four to six inches thick?

The crack analogy is making me wonder - will those new medical MJ clinics be accepting debit cards???? Would their patrons opt-in to OD fees?

Night all!
Posted By: John Burnett

Re: Reg E Revisions Announced - 12/21/09 04:36 PM

Originally Posted By: Go 4 It Granny

What about the bookkeeper who sits behind the desk and decides what to pay and what not to pay..... Will that depend on the posting order?

One result of the new rule is that banks will be pressured to make certain that their posting order takes non-returnable items (ATM, POS, cashed-out on-us checks, etc.) first, and in-clearing checks and ACH debits will be last. There's still no dictum from Washington on the order of payment of checks, but you can bet there will be if banks keep shifting to largest first order.
Posted By: zitch70

Re: Reg E Revisions Announced - 12/22/09 04:18 PM

Begining 7-1-10, we will not be able to charge fees for NSFs unless the account opted in. For most customers NSFs are rare especially for POS transactions. To find out how big a problem you might be facing or how many customers have been NSF due to POS transactions, get a download of customers that have had NSFs in excess of 3 or 4 during 2009 due to a POS transaction without funds in other accounts (CIF). Once you find those customers then move them to ATM cards from debit cards. That will leave customers who go NSF rarely or have compensating balances for your right of set off if they do not cover the NSF.

How do you move them to ATM cards? Hot card the debit card due to scamming or skimming, and offer ATM card until problem (scamming skimming) cleared up would be one option.
Posted By: GoGreen

Re: Reg E Revisions Announced - 12/23/09 07:18 PM

If you do not get an opt-in and you have no more monies in the linked account , can you charge OD fee? What I heard from the FED Seminar, you cannot charge an OD fee if no opt-in is received in this case.
Posted By: Deena

Re: Reg E Revisions Announced - 12/23/09 08:15 PM

That's what I heard from the Fed seminar, too. If the transaction that exceeds the available funds in the linked account or LOC is a one-time debit card or ATM transaction and the customer has not opted in, no fee can be charged.
Posted By: John Burnett

Re: Reg E Revisions Announced - 12/23/09 11:07 PM

I cannot recommend taking such action as a preventive action unless you have actual experience after 7/1 with a customer's overdrafts through POS. And then I would not recommend using a trumped-up excuse like skimming. I'd be up front and say it's due to account mishandling, triggering overdrafts (that the customer did not want you to approve anyhow).
Posted By: Dave M_TCA

Re: Reg E Revisions Announced - 01/08/10 10:46 PM

Originally Posted By: West_Delta
I recently reviewed the Fed's Outlook Live podcast from December 10th, which I recommend to anyone who hasn't already done so. The link is:

http://www.philadelphiafed.org/podcasts/player-outlook.cfm?file=outlook-live%2Foutlooklive_1209.mp3&title=Outlook%20Live%20Conference%20Call

There is one exchange that amazes me. At around the 29:10 mark, a banker asks a question about charging fees for inadvertent overdrafts that might occur even in a "return and charge" environment. The regulator's response was "we did not contemplate" this scenario.

Later in the call, the regulator acknowledges that, loosely paraphrased, "bankers deal with imperfect information all the time", and that "this is another one of those instances". She is correct. We do regularly deal with imperfect information. Imperfect information introduces risk, and the key way we deal with risk is with PRICE. So, in essence, when the price mechanism is no longer available (that is, we cannot charge for the inadvertent overdraft), our reaction will be to withdraw the service (the debit card) since we can no longer price according to level of risk. So potential customers are more apt to get a re-loadable stored value card from Wal-Mart than deal with a bank. And the banking industry becomes even more irrelevant.


Does anyone know where I can get a copy of the slides from this presentation?
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/11/10 03:59 PM

Here's the link, and you'll find a link to a PDF of the slides at the bottom of the page.

http://www.philadelphiafed.org/bank-resources/publications/consumer-compliance-outlook/outlook-live/
Posted By: dorkybarb

Re: Reg E Revisions Announced - 01/11/10 10:01 PM

I apologize if this has already been addressed in this thread, but my head feels like it is going to explode after reading everything. I am more confused than ever now.

My friend and I work in 2 different banks who view this differently.

Neither of our banks offer the 'overdraft service' where when the account is opened, there is a set amount that a person can overdraft and those items will be paid.

Do we still need to have our customers decide if they want to opt-in or opt-out?

For our customers, who do not have overdraft protection in place, it is up to the officer on the account to decide if the items that caused the negative balance will be paid or returned. For this instance, can they be charged?
Posted By: BrianC

Re: Reg E Revisions Announced - 01/11/10 10:19 PM

If the items in question are ATM/Debit card items, then your customer cannot be charged unless they have an opt-in.
Posted By: fnbgal

Re: Reg E Revisions Announced - 01/12/10 05:38 PM

Thank you for sharing the Podcast information. I found it to be very helpful, and it didn't cost anything!!
Posted By: Patsy Cline

To charge do you have to authorize and pay? - 01/14/10 04:22 PM

We've been meeting already to discuss our plan of attack. I need clarification..

We currently do not authorize and pay od for ATM and one-time debit card transactions. So... we would not have to comply with the notice and opt-in.

We do not have real-time processing. So... timing issues do cause ATM and one-time debit card transactions to overdraw a customer's account. Once it hits the bank and the customer doesn't have the money we cannot return them ... so we'd like to continue to charge. To continue to charge we'd have to give the notice and opt-in.

If we obtain the customer's opt-in this means we can continue to charge. But... does it also mean that we will have to start authorizing and paying ATM and one-time debit card transactions? We want to continue to NOT authorize and pay overdrafts but be able to charge if it happens inadvertently. Make sense? crazy

The model notice give 2 options. I do not want Bank to authorize and pay overdrafts on my ATM and everyday debit card transactions. ~OR~ I want Bank to authorize and pay overdrafts on my ATM and everyday debit card transactions.

We just want to be able to charge them if it happens inadvertently.... grin
Posted By: Patsy Cline

Re: To charge do you have to authorize and pay? - 01/15/10 01:37 PM

anyone...
Posted By: ktac MITCH

Re: To charge do you have to authorize and pay? - 01/15/10 01:45 PM

Originally Posted By: Lady Joey's Mom
We've been meeting already to discuss our plan of attack. I need clarification..

We currently do not authorize and pay od for ATM and one-time debit card transactions. So... we would not have to comply with the notice and opt-in.

We do not have real-time processing. So... timing issues do cause ATM and one-time debit card transactions to overdraw a customer's account. Once it hits the bank and the customer doesn't have the money we cannot return them ... so we'd like to continue to charge. To continue to charge we'd have to give the notice and opt-in.

If we obtain the customer's opt-in this means we can continue to charge. But... does it also mean that we will have to start authorizing and paying ATM and one-time debit card transactions? We want to continue to NOT authorize and pay overdrafts but be able to charge if it happens inadvertently. Make sense? crazy

The model notice give 2 options. I do not want Bank to authorize and pay overdrafts on my ATM and everyday debit card transactions. ~OR~ I want Bank to authorize and pay overdrafts on my ATM and everyday debit card transactions.

We just want to be able to charge them if it happens inadvertently.... grin

I will give you my understanding - but I am not 100% sure at this point.
If you don't want to authorize and pay, you can continue to do so BUT you could not charge for the inadvertent / "timnig of presentment" caused ODs
Posted By: Seastar

Re: Reg E Revisions Announced - 01/15/10 03:54 PM

What I'm reading is the Fed released this amendment to Reg. E "to assist consumers in understanding how overdraft services provided by their institutions operate." (p. 14). However, based on the exception (p. 50), if our institution doesn't allow customers to overdraft their accounts for ATM transactions, one-time debit card transactions or non-recurring debit card transactions, then you do not need to send the notice as their is nothing to opt-in to (you also couldn't charge a fee for an inadvertent overdrafts).

Our institution would like to no longer allow customers to overdraw their accounts for the above transactions, so the customer would not have anything to opt-in to. If there was an accidental overdraft for those transactions that got through, we would pay the overdraft but not charge the customer a fee. According to the exception, we would no longer have to send the overdraft opt-in notice. Doesn't this seem to contradict the point of the reg (listed above)? I feel like we should still send a notice out but alert the customer of what our practices are.

I am aware that we would have to update all our disclosures under Reg DD to account for the changes that we are making. If we decide to go with the institution's above decision, I believe that when sending out new account disclosures to update for the overdraft coverage we no longer offer, we should also send out a notice similar to A-9 that states what the new overdraft practices would be (minus the opt-in). Thoughts?
Posted By: Patsy Cline

Re: To charge do you have to authorize and pay? - 01/15/10 05:06 PM

Quote:
I will give you my understanding - but I am not 100% sure at this point.
If you don't want to authorize and pay, you can continue to do so BUT you could not charge for the inadvertent / "timnig of presentment" caused ODs


We want to continue to NOT authorize and/or pay ATM and one-time debit transactions that would overdraw.... But we also want to be able to charge if it happens due to timing issues (we are not real-time).

If they opt-in I know we can charge... but does that also mean if they go to an ATM and don't have the money... we have to authorize and pay that? crazy
Posted By: John Burnett

Re: To charge do you have to authorize and pay? - 01/15/10 08:47 PM

OK. Back away from the question from your perspective and consider what the customer will see.

Here's the bank's message:
"We don't authorize ATM and debit card transactions that would overdraw your account. However, once in a while one of those suckers gets under our radar because the authorization request was for less than the actual purchase (this often happens with self-service fuel pumps), or no authorization was requested (because it was a smaller transaction under the merchant's floor limit), or because the posting of the transaction was delayed and another check or other item got paid first. When that happens, we don't have any choice about paying the debit card transaction. We will charge an overdraft fee when that happens."

"If you want to have out standard overdraft service described about for ATM and one-time debit card transactions, please complete the consent form below and return ....."

"If you do not return the form, we will still pay those transactions that slip under our radar, but won't be able to impose an overdraft fee."

Guess what action your customer's going to NOT take?
Posted By: John Burnett

Re: To charge do you have to authorize and pay? - 01/15/10 08:50 PM

Originally Posted By: Lady Joey's Mom


If they opt-in I know we can charge... but does that also mean if they go to an ATM and don't have the money... we have to authorize and pay that? crazy


The regulation does not require you to approve an ATM withdrawal that would overdraw an account unless you have a contractual obligation to honor the overdraft (in the form of an OD line of credit or similar contract).
Posted By: brainOverload

Re: To charge do you have to authorize and pay? - 01/21/10 03:08 PM

Here's two that I do not think has been asked yet...

1) When do we start sening out the opt-in form to existing customers? Do we start sending them July 1 and continue charging them but if no opt-in received by Aug 15 stop charging them?

-OR- do we have to get the opt-in/opt-out back from the customer before Aug 15? (this option would seem impossible)

2) It there a time frame as to when we have to send the confirmation to the opt-in customers and is there a model form for that confirmation verbiage? Oh wait I see Ken's comments from his recent webinar "The notice may be a copy of the opt-in form that the consumer signed as long as it contains the information about revocation" and "the customer can opt-in or revoke at any time."
Posted By: John Burnett

Re: To charge do you have to authorize and pay? - 01/21/10 03:25 PM

  • Actually, you can start sending out the overdraft program disclosure and request for opt-ins at anytime. I do suggest you coordinate the date with the date on which you start providing the information to new account customers, so that you ensure you're getting everyone. The August 15 date is correct, but it's a Sunday, so plan accordingly.
    • If you don't hear from the customer, you turn off overdraft service for card transactions so that you don't assess a fee on or after 8/15.
    • If the customer provides an opt-in, you can leave overdraft service activated on and after 8/15.
    • If you get a negative response to the opt-in request -- the customer tells you he or she does not want it -- you should act promptly to deactivate overdraft service for card transactions, not waiting until 8/15.
  • The confirmation should be delivered promptly upon receipt of the opt-in, because it is a prerequisite to activating the service. There is no model form, but it has to include the information about revocation rights.
Posted By: brainOverload

Re: To charge do you have to authorize and pay? - 01/21/10 03:37 PM

Thanks John...one more and i am sure this has been addressed but i just cannot seem to wrap my brain around it.

We offer an "Overdraft Protection Service" where the customer has $300 to pay inadvertant overdraft but they will be charged for each item that we pay into that $300. They are given a disclosure with the terms and conditions, they sign the account agreement (sig card) which meand they acknowledge those terms and conditions.

Now with all that said, do these changes mean that regardless of the previous disclosures and customers agreement we will not be able to charge for the ATM and one-time debit card transactions without the opt-in or can we continue charging according to the original terms and conditions?
Posted By: Elwood P. Dowd

Re: To charge do you have to authorize and pay? - 01/21/10 03:47 PM

The presence or absence of a formal program for paying overdrafts is not relevant.

If your bank wants to collect a fee for overdrafts created by one time debit card transactions or ATM withdrawals this regulation affects you. If you do not conduct an opt in program in compliance with the regulation’s requirements you will not be able to impose a fee for overdrafts created by one time debit card and ATM transactions after the effective dates.
Posted By: brainOverload

Re: To charge do you have to authorize and pay? - 01/21/10 04:00 PM

That's what I thought. Thanks Ken.

I am listening to that Fed Podcast cause I missed it and "WOW" there are some hostile bankers out there!

"What we've got here is... failure to communicate. Some men you just can't reach. So you get what we had here last week, which is the way he wants it... well, he gets it. I don't like it any more than you."
Posted By: brainOverload

Re: To charge do you have to authorize and pay? - 01/21/10 07:01 PM

The questions and thoughts keep on coming...

Is there a record retention period for the opt-in/out notices that we receive from the customer? I am assuming if there is, it will follow the Reg E retention...2 years?
Posted By: trout22

Re: To charge do you have to authorize and pay? - 01/21/10 09:36 PM

What all is everyone planning to retain? There are multiple ways to opt-in (phone, website, snail mail, etc.) which would each require a different type of retention plan for obtaining the opt-in (or also if they select the 'do not' opt-out option), or would it be sufficient to just keep a copy of the customer's confirmation notice, or both??
Posted By: Wonder Why?

Re: Reg E Revisions Announced - 01/22/10 09:32 PM

If a customer completes an electronic Opt-In on our website or in our online banking is is acceptable to provide the Confirmation electronically? I am thinking an instruction to print and save a copy for your records...

I can find where it is acceptable to provide the Opt-in notice electronically but everything I read says the Confirmation must be in writing and is silent as to whether this can be electronic.



Stop the rollercoaster...I want off!
Posted By: jat

Re: Reg E Revisions Announced - 01/25/10 03:39 PM

I know that in the case of a joint account only one account holder can opt in, but what about a customer with multiple accounts? If the customer mails us the opt in notice and doesn't include a specific account number, can I assume they want to opt in for all of their accounts?
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 01/25/10 03:44 PM

No, if the notice does not contain an account number, you may not assume they opted in for any accounts. There is no circumstance where "silence gives consent" here; the consumer must opt in using an affirmative method and must be allowed to make different choices on different accounts.
Posted By: Henry1

Re: Reg E Revisions Announced - 01/25/10 04:19 PM

Our bank offers overdraft facilities however we reserve the right to withdraw these services if we feel that there is account abuse. We currently therefore have customers whose overdraft facility has been withdrawn. My questions are:
Do we still need to send them an opt-in letter?
Or can we wait until such time as we are re-instating their overdraft facility and then have them complete the opt-in letter?
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/25/10 04:36 PM

Originally Posted By: Ohio Banker
If a customer completes an electronic Opt-In on our website or in our online banking is is acceptable to provide the Confirmation electronically? I am thinking an instruction to print and save a copy for your records...

I can find where it is acceptable to provide the Opt-in notice electronically but everything I read says the Confirmation must be in writing and is silent as to whether this can be electronic.



Stop the rollercoaster...I want off!


Actually, the answer is hiding in plain site. Look again at 205.17(b)(1)(iv): "Provides the consumer with confirmation of the consumer’s consent in writing, or if the consumer agrees, electronically, which includes a statement informing the consumer of the right to revoke such consent."
Posted By: AllSmiles

Re: Reg E Revisions Announced - 01/25/10 04:37 PM

We do have an ODP program, however we force pay ATM/debit card transactions first and do not charge a fee. Therefore only checks and ACH's post to the NSF report and we charge a fee on these. Do we still need to opt-in?
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/25/10 04:39 PM

Originally Posted By: Henry1
Our bank offers overdraft facilities however we reserve the right to withdraw these services if we feel that there is account abuse. We currently therefore have customers whose overdraft facility has been withdrawn. My questions are:
Do we still need to send them an opt-in letter?
Or can we wait until such time as we are re-instating their overdraft facility and then have them complete the opt-in letter?



If the customer doesn't have the service, there is nothing to opt into. However, as you have suggested, if the customer later applies for overdraft services, or if you elect to re-instate it, you won't be able to charge a fee for overdrafts caused by ATM and one-time debit card transactions unless you walk through the four-step process in 205.17(b)(1).
Posted By: Henry1

Re: Reg E Revisions Announced - 01/25/10 05:09 PM

Thank you very much for clarifying this for me smile
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 01/25/10 07:20 PM

Our overdraft program gives a customer eitehr $300 or $500 limit. This means we will cover their overdrafts upto that amount. It includes checks, ACH, ATM, POS, etc. We charge for each item paid into overdraft. Would it be permissable to develop an opt-in notice for the whold overdraft program instead of just ATM and debit cards? If we get the opt-in we can charge. If no opt-in, we won't pay anything.

We currently have a disclosure that lists all the ways in which you could overdraw your account. There is also a section that covers ATM and Debit Cards. Can we use this brochure as our disclosure and then develop and opt-in notice for the program?
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/26/10 02:11 PM

Ironically, you can refuse to provide a consumer overdraft services for ATM and one-time debit card transactions ("card transactions") if the consumer does not have (or opt into) overdraft services for other transactions. But you cannot deny overdraft services for non-card transactions if a consumer does not opt into overdraft services for card transactions.

The result is that you can't "bundle" your overdraft services on a "take it or leave it" basis. If you offer overdraft services, consumers must be able to take just the non-card transaction coverage.

You cannot use a brochure as your disclosure for overdraft services under §205.17(b)(1)(i). The disclosure must conform to the requirements of §205.17(d) and be substantially in the format of sample form A-9.
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/26/10 02:21 PM

Put another way, if your bank provides overdraft services to a consumer (remembering that "overdraft services" means charging a fee for permitting a transaction to be paid that overdraws an account, with or without a "program"), you must provide a version that excludes coverage of card transactions. Offering to extend coverage to card transactions is optional for the bank, but it must be on an consumer opt-in basis only.
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 01/26/10 05:05 PM

Thanks for the reply. I have developed a notice using the model disclosure. We currently allow clients to overdraw their account using ATM/Debit cards. Would we state this under the section WE DO AUTHORIZE or WE DO NOT AUTHORIZE. I'm think we put it in the section that we do authorize and then give them the opportunity to opt-in or opt-out of ATM/debit card transactions.
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/27/10 05:06 PM

Use the language that's in the sample form, or something close to it. It says:

"We do not authorize and pay overdrafts for the following types of transactions unless you ask us to (see
below):
· ATM transactions
· Everyday debit card transactions"

And I cannot emphasize enough, the regulation does not allow you to assume the customer has the overdraft service and can opt out. You must assume the customer doesn't want the service unless you get an opt-in.

You can provide overdraft services for ACH, check and other non-card transactions automatically, but you can only OFFER overdraft services for ATM and everyday debit card transactions, and activate it only if the consumer opts to take it.
Posted By: Anonymous

Re: Reg E Revisions Announced - 01/27/10 05:23 PM

John, we can offer overdraft services for ATM and everyday debit card transactions without an opt in, we just can't charge an overdraft fee for them unless they opt in, correct?
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/27/10 05:36 PM

Technically incorrect, but only because I am nitpicking based on the Reg E definition, found in 205.17(a), quoted in relevant part:

"For purposes of this section, the term “overdraft service” means a service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account. ..."

If you don't charge a fee, it isn't an overdraft service. But you can (and sometimes have to) pay an ATM or everyday debit card transaction that overdrafts an account without getting an opt-in, if you don't assess a fee for doing so.
Posted By: tango

Re: Reg E Revisions Announced - 01/27/10 06:47 PM

My institution is having a disagreement and I can not find a clear clarification on this:

We currently offer an overdraft privilege service. I understand customers will need to Opt-in in order for us to pay and charge ATM and one-time debit card transactions. However, can't we continue to offer the overdraft privilege service to pay checks, ACH and recurring Debit Card transactions WITHOUT the customer opting in? Our core processor is creating an Opt-In field solely for ATM and one-time debit card purchases. My thought is, anyone who currently has overdraft privilege now, will contine to have it after the Reg goes into affect. However, unless they have opted in for ATM and one-time debit card transactions, it will only be in place for checks, ACH and recurring debit card transactions. Others disagree and say that they need to opt-in for any type of overdraft privilege service.
Posted By: Anonymous

Re: Reg E Revisions Announced - 01/27/10 07:31 PM

You are correct. This is an opt-in ONLY for ATM and one-time POS purchases only.
Posted By: John Burnett

Re: Reg E Revisions Announced - 01/27/10 10:41 PM

Any opt-in requirement for non-card transactions would be purely of your own making -- it's not required by the regulation.
Posted By: smith

Re: Reg E Revisions Announced - 01/28/10 09:37 PM

We'd like any opinions on the following scenario:

Our bank has a courtesy overdraft program and we are planning to offer an opt-in for ATM/one-time debit to those customers in the program. How should we treat those customers who never qualified for our Program in the first place? Based on 205.17(b)(4) do we need to send those customers an opt-in notice?

In other words, can we "discriminate" between our customers who are in the program and those who are not?
Posted By: zitch70

Re: Reg E Revisions Announced - 01/28/10 10:11 PM

If a customer does not opt in, can a bank charge a fee should the customer attempt a transaction that is be denied because there are not available funds in the account? Would not this be the same as the option for a NSF check that the bank charges and returns thus not paying into overdraft?
Posted By: rlcarey

Re: Reg E Revisions Announced - 01/29/10 11:40 AM

You mean you want to charge a customer for an attempted transaction that is denied at the point of sale?? I would think this would be deemed an unfair practice.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 01/29/10 01:44 PM

As is often evidenced by his responses, rlcarey has been at this for so long he can just guess the right answer. wink From the supplementary information that accompanied the revisions:

A few commenters suggested the possibility that financial institutions may create new fees for declining ATM or one-time debit card transactions. While the final rule does not address declined transaction fees, the Board notes that such fees could raise significant fairness issues under the FTC Act, because the institution bears little, if any, risk or cost to decline authorization of an ATM or one-time debit card transaction.

From my perspective, its analagous to a backhanded balance inquiry. If a bank does not charge for electronic balance inquiries there is no basis for charging for a refused ATM or debit card transaction. Those who do will get what they so richly deserve.
Posted By: GoGreen

Re: Reg E Revisions Announced - 01/29/10 02:03 PM

I have a question on the courtesy overdraft program (COP) if your customer is aware of this program or not? We have a similar program but I am under the impression the customer must know about such a program if offered. You are placing that COP in the balances at the ATM or POS for access?

I am now confused of how your program may work.
Posted By: DCollins

Re: Reg E Revisions Announced - 01/29/10 08:57 PM

Concerning the written confirmation---The only thing I can find is that the written confirmation is to include a statement informing the consumer of the right to revoke consent. Is there anything else that is required? Do we have to go into a lot of detail on this? Does anyone have theirs done yet?
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 01/29/10 10:17 PM

If you add the language mentioning the right to revoke, etc. you can use a copy of the model form the consumer executed as the confirmation. Don't try to invent the wheel.
Posted By: JoAnne

Re: Reg E Revisions Announced - 02/01/10 05:14 PM

I've just spent the morning reading this and other Reg E topics, so I apologize if this question has already been asked. Does the opt-in notice need to be provided on accounts that do not have an ATM or debit card attached to them?
Posted By: JoAnne

Re: Reg E Revisions Announced - 02/01/10 05:15 PM

I've just spent the morning reading this and other Reg E topics, so I apologize if this question has already been asked. Does the opt-in notice need to be provided on accounts that do not have an ATM or debit card attached to them?
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 02/01/10 05:51 PM

Would adding the following to the bottom of the disclosure and opt-in form work? I have it in bold to be seen. Would be be able to photocopy this notice once returned as our confirmation?

Revocation: You do have the right to revoke your consent at any time. You may revoke your consent either by writing to us or verbally telling us.
Posted By: John Burnett

Re: Reg E Revisions Announced - 02/01/10 10:28 PM

Originally Posted By: ahkcompliance
Would adding the following to the bottom of the disclosure and opt-in form work? I have it in bold to be seen. Would be be able to photocopy this notice once returned as our confirmation?

Revocation: You do have the right to revoke your consent at any time. You may revoke your consent either by writing to us or verbally telling us.


Yes, you can use the same form and provide a copy as your confirmation.
Posted By: John Burnett

Re: Reg E Revisions Announced - 02/01/10 10:30 PM

Originally Posted By: JoAnne
I've just spent the morning reading this and other Reg E topics, so I apologize if this question has already been asked. Does the opt-in notice need to be provided on accounts that do not have an ATM or debit card attached to them?

No. There's nothing for them to opt into. But do remember to provide the disclosure and ask for the opt in if the customer later asks for a card, and don't provide the new cardholder overdraft service for card transactions unless he or she provides that opt-in
Posted By: ahou

Re: Reg E Revisions Announced - 02/01/10 11:46 PM

As long as it is clearly laid out, can more than one account be listed on the opt-in form. For example, a check box beside each account the customer could opt into.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 02/02/10 01:31 PM

Note that a speaker on the FRB podcast went so far as to say there needed to be one form per account.

My opinion is that statement was made "in the heat of the moment" and is not supported by the regulation. I think you could list multiple account numbers with a clear opt-in/opt-out decision for each on the model form.

You cannot make a single decision apply to all. If a customer opts-in on one account and does nothing on the others there is no inference that she is opting in for all of them.
Posted By: YHWB

Re: Reg E Revisions Announced - 02/02/10 07:05 PM

I have read every page of this post and am more confused than I have been in a long time. Our bank does not have an overdraft service. Under the defination in 20517, a service does NOT include a line of credit or transfer from another account, which is how we would handle any items presented without funds to cover them. If a customer did not have funds in any of these accounts, a decision would be made on a case by case basis on whether to pay or return the item. It is our bank's practice to decline to authorize and pay any ATM or one-time debit card transaction where funds are not available. From reading the regulation, I do not beleive any of the requirements appply to our bank and we may change a fee whether anyone has opted in or out, since by defination the rules do not apply to our situation. Am I wrong?
Posted By: jennyc

Re: Reg E Revisions Announced - 02/02/10 07:12 PM

You are in the same boat as us, and at one point (back in Nov), we too thought we were excluded from this since we have a policy of declining debit/atm transactions if the funds aren't available. But the Fed has clarified this, and what we are excluded from is sending the OPT IN notices. We still can not charge a fee.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 02/02/10 07:26 PM

YHWB,
The threads work best "one question at a time." Monster threads like this are a wellspring of confusion, but Jennyc has it right.
Posted By: John Burnett

Re: Reg E Revisions Announced - 02/02/10 08:21 PM

Originally Posted By: YHWB
If a customer did not have funds in any of these accounts, a decision would be made on a case by case basis on whether to pay or return the item.

If you add to what I've quoted the fact that you charge a fee if you pay the item, that's an overdraft fee and you have met the definition of an "overdraft service" in 205.17(a).

[Anticipating a follow-up question: If you charge a fee and the check or other item is paid, it's an overdraft fee regardless of what name you attach to it. If you charge a fee and the item is not paid, it's a fee for returning an item unpaid, again, regardless of what you might call it.]

I don't hold section 205.17(b)(4) up to be a model of clarity. Even some influential folks at the Fed have admitted the wording could have been clearer. However, so far the Fed has not seen fit to publish a "clarification."
Posted By: Dave D

Re: Reg E Revisions Announced - 02/03/10 04:19 PM

Recently there has been some chatter on the ABA Bank Marketing Network site about Reg E Opt-ins. A number of the bank marketers there expressed an interest in a brainstorming session to share ideas regarding this topic. I agreed to be the host of this session, which is planned as a webinar hosted on Friday, February 5, at 2 pm EST.

I am not a banker – our firm provides checking account programs to banks. I am not using this session to promote a solution for Reg E opt-in programs, as my company does not provide this service. It will be a discussion-only forum consisting almost entirely of bank marketers.

So far, over 50 bankers have planned to participate, and perhaps more will join. With this many people participating, my plan is to have a “moderated discussion” – I’ll ask people to submit questions before the session, and then pose those questions to the group so that our discussion will be orderly. Based on the topics posted so far on the ABA discussion thread, I expect that there will be many questions about the compliance considerations connected to Reg E opt-in tactics

Would any of you Gurus be willing to join me as a participant in this discussion? I would position you as part of an “Expert Panel.” It would be great to have a respected and knowledgeable person to interact with our group!

P.S. I did submit this request last week through the "Request a Speaker" section on the bankersonline.com site, but I have not received a reply.
Posted By: RR Joker

Re: Reg E Revisions Announced - 02/03/10 07:29 PM

so, having spent so much time on lending reg changes, I have only stayed briefly in touch with this one.

As you know, often a merchant forces a transaction through even though you show insufficient funds and refuse the transaction. What is the recourse in that situation. Obviously, you can't return the item...does it mean you also cannot charge a fee even though it was out of your control?
Posted By: John Burnett

Re: Reg E Revisions Announced - 02/03/10 08:31 PM

Here's the new Reg E mantra for OD fees for card transactions, after 6/30/2010:

"No opt-in means no OD fee. No opt-in means no OD fee...."
Posted By: abbyauditor

Re: Reg E Revisions Announced - 02/03/10 09:09 PM

I'm even more confused now. Our bank is live and real time. Therefore, if you try to use your debit card/ATM card and the funds are not available the transaction is declined. Does this exempt us from the opt-in?
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 02/04/10 10:50 AM

There are no exemptions because no one is required to run an opt-in program. If:

* customers are never overdrawn via one time debit card or ATM transactions (your situation?) or

* overdrafts are created by these methods, but a bank is not concerned about collecting any fees,

then the bank simply has no need to run an opt in program and you will not be subject to regulatory criticism if you do not.

Being live and real time is generally not a fail safe barrier to these types of overdrafts. Offline situations, timing differences, authorizations on lower dollar amounts than presented happen in most (I would have said all) institutions. They represent a very small percentage of the total number of EFT transactions, but they do happen.
Posted By: Jerseygirl

Re: Reg E Revisions Announced - 02/04/10 01:19 PM

1. Can we still collect a fee for drawing on uncollected funds without having the customer opt-in?
2. We do not put new customers into our courtesy OD protection until we have a 45 day history on the account – if someone opts-in for Reg E OD must that go into effect immediately?
3. Is having the account opening person explain the Reg E opt-in considered promoting an OD program ergo the Reg DD OD ad rules come into play?
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 02/04/10 03:37 PM

1. For other purposes, the Regulation DD commentary classifies a fee for drawing on uncollected funds as a "fee for paying overdrafts." I'll offer a friendly amendment to John's mantra from above, "No opt-in means no overdraft fees of any kind on covered items"

2. Your time frame for delaying admission into your formal program for paying overdrafts has nothing to do with a customer's opt - in decision in response to the Regulation E notice. The fact that your customer has opted in does not suggest what your decision might be if he presents a covered EFT against insufficient funds. (I acknowledge that he may believe otherwise.)

As an aside, I suggest you begin describing your progam as something other than "overdraft protection." Model Form A-9 uses that term to describe programs that actually do protect consumers from overdrafts. My expectation is that examiners will use that to say the term is misleading when it is used to describe programs that create overdrafts.

3. From the commentary:

2. Other messages. Examples of messages that are not advertisements are:

i. [abridged]

ii. In-person discussions with consumers about the terms for a specific account


In person conversations are not advertisements. I have to assume that "in person" conversations includes telephone conversations.

Speech is incredibly difficult to montior and regulate. Banks are bound to conclude that sending anything with the notice that attempts to explain it will probably be classified as an "advertisement" and trigger specific content requirements. On the other hand if they just send the Notice they can be assured it will be unintelligible to consumers and they can follow it up with an explanatory phone call and say what they wish.
Posted By: VMack

Re: Reg E Revisions Announced - 02/04/10 03:58 PM

Yes, your Signature platform system will do what it should to be in compliance with the new Reg E revisions...if you pay a fee for upgrade. According to Fiserv:

Quote:
The practice of exposing a courtesy limit amount to ATM and one-time POS transaction authorizations is an optional industry practice, and is not required as part of the Regulation E changes. Alternatively, if you are offering this service, the regulation has outlined required practices to be in place as part of this service.

In general, this particular process is viewed in the industry as an advanced revenue generating
solution and has been positioned as such in the past by Fiserv and will continue to be managed
as an value added solution on-going.


I won't even start... mad
Posted By: brainOverload

Re: Reg E Revisions Announced - 02/04/10 04:02 PM

HOLY COW! There are 9 topics out there for this one subject...no wonder so many people are confused.

Ken, John, you got your work cut out for ya here. Thank you both very much for being there for us.
Posted By: Lele

Re: Reg E Revisions Announced - 02/04/10 10:24 PM

The gas stations in this area, when you use your debit card, charge your account $1 to see if the account is valid. Then you could charge $50 in gas and overdraw your account. If you did not opt-in, we cannot charge you after 7/1/2010, correct?
If the customer has an available balance at the time they use their debit card and the vendor does not post it that day and the customer has another transaction (check or ACH) when the debit card transaction comes through they are NSF - but we cannot return it and will not be able to charge them, correct again?

We also have a policy of declining debit/ATM transactions if the funds aren't available.
Posted By: John Burnett

Re: Reg E Revisions Announced - 02/05/10 04:30 PM

I'll repeat the Reg E OD fee mantra, with Ken's friendly amendment, Lele:

"No opt-in means no OD fee of any kind for covered transactions. No opt-in means no OD fee of any kind for covered transactions. No opt-in means no OD fee of any kind for covered transactions."
Posted By: Yoda66

Re: Reg E Revisions Announced - 02/08/10 05:02 PM

One interesting customer-service wrinkle on the opt-in form is the request by the customer to opt-out of ALL OD services (including ACH and check writing OD). I know, the form was specifically designed for reg E transactions, but I have come to respect the law of unintended consequences from any type of communication to customers (I can already see the hand-written reply from the customer in response to the DM request).

My recommendation to clients has been to include a specific process action on the FAQ document used by bankers when that happens: if you are customer-centric, I would remove the account from the OD Matrix
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 02/09/10 07:12 PM

Tossing this out there - any thoughts on offering tiered pricing for ATM/Debit OD's for folks who opt-in?

The regulation prohibits offering more attractive or more punative account terms for other than OD service based on whether a customer opts-in or not, BUT what about offering more attractive pricing for lower dollar transactions?

I mean, let's face it - folks would probably be less upset if they paid a $2 fee for overdrawing their account by the price of a latte vs. a $30 fee.

Just tossing that out there - and one other thought -

There are people out there who live paycheck to paycheck and do not have credit cards. If they need to buy groceries now, but payday is still two days away, what are their choices:
1. Go hungry for two days
2. Pay the $30 fee and continue feeding the family
3. Go to a PayDay lender and wind up paying a whole lot more than $30.
Posted By: John Burnett

Re: Reg E Revisions Announced - 02/09/10 10:58 PM

People who overdraw accounts regularly and paid the typical OD fee just to make it to payday are taking out the equivalent of a payday loan. Granted, the fees are smaller in most cases, but the result is the same. They just dig the hole deeper every time.
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 02/09/10 11:36 PM

Originally Posted By: John Burnett
People who overdraw accounts regularly and paid the typical OD fee just to make it to payday are taking out the equivalent of a payday loan. Granted, the fees are smaller in most cases, but the result is the same. They just dig the hole deeper every time.


True dat - but if you take away the ability to overdraw the account, they're just going to go to the PayDay lender and dig an even deeper hole.

Sometimes the hole is temporary, sometimes it's not.

Reminds me of the days when ketchup from the packages on the table at a restaurant, mixed with hot water and eaten with crackers taken from the table of the aforementioned restaurant would be dinner the day before payday.

I'ts only been in the last few years that I have been emotionally able to throw away (gasp!) any unopened packages of ketchup.
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 02/10/10 03:37 PM

In our mailing to customers, marketing wants to put a advertismetn in there of "why they should opt-in." What requirements will need to be stated in the ad?
Posted By: Princess Romeo

Re: Reg E Revisions Announced - 02/10/10 03:56 PM

As long as you provide the model notice, I can't think of any requirement for a "rah-rah" ad as long as the ad is not deceptive.
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/15/10 07:02 PM

Originally Posted By: smith
We'd like any opinions on the following scenario:

Our bank has a courtesy overdraft program and we are planning to offer an opt-in for ATM/one-time debit to those customers in the program. How should we treat those customers who never qualified for our Program in the first place? Based on 205.17(b)(4) do we need to send those customers an opt-in notice?

In other words, can we "discriminate" between our customers who are in the program and those who are not?


If the customers who did not qualify for your courtesy program do not receive overdraft services -- that is, you don't approve and pay card transactions that overdraw or would overdraw an account, and don't charge a fee for any such transactions -- the accounts would qualify, in my opinion, for the 205.17(b)(4) exception and you would not have to provide an opt-in notice or obtain an opt-in. You would not be able to charge such accounts an overdraft fee for a card transaction that must be posted that would overdraw such an account, regardless of the circumstances leading to the posting of that transaction.

If, at a later date, one of the consumers involved should request and be approved for your overdraft service, you would have to step through the opt-in procedures before charging an overdraft fee on the account.
Posted By: girlsrope2

Re: Reg E Revisions Announced - 03/16/10 04:44 PM

Have spent considerable time reading this thread and others and have a couple of questions that I have not seen addressed here. Can a bank still revoke a customers debit card for abuse of the account (i.e. too many "inadvertent" overdrafts)? Can we remove the ODP lines for reasons other than the customer failed to open in? And do we still have the ability to close the accounts for abusive practices? Seems to me that regardless of whether or not the customer has opted in or out abuse of the privilege of having an account remains the same--am I wrong?
Posted By: Dolly Nugent

Re: Reg E Revisions Announced - 03/16/10 05:02 PM

You might verify that your deposit agreement states you have the right to close an account. Also, most EFT/Card agreements also state that the card is the property of the bank. Nothing in the amendment changes a bank's right to close and account or take away a card.
Posted By: Anonymous

Re: Reg E Revisions Announced - 03/16/10 05:20 PM

To expand on Dolly's comment, just make sure you do it for all customers who abuse the account in this manner, not just the ones who didn't opt in.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 03/16/10 05:31 PM

Quote:
just make sure you do it for all customers who abuse the account in this manner, not just the ones who didn't opt in.


Just wanted to make certain everyone saw that.

All this talk about yanking the card on frequent overdrafters who did not opt-in...be prepared to do the same thing for frequent overdrafters who do opt in. Otherwise, it's going to seem a little hypocritcal and suggest you have one set of account features for those that do and another for those that do not.
Posted By: AmyH

Re: Reg E Revisions Announced - 03/18/10 02:36 PM

If we authorize a one-time debit card transaction using available ODP funds for those that opt-in and do not include the ODP balance for those that opt-out, is that treating them differently in violation of the reg?
Posted By: AuditorK

Re: Reg E Revisions Announced - 03/18/10 02:50 PM

Originally Posted By: AmyH
If we authorize a one-time debit card transaction using available ODP funds for those that opt-in and do not include the ODP balance for those that opt-out, is that treating them differently in violation of the reg?


Sounds to me like that would be treating them differently based on opt-in status.
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/18/10 02:59 PM

No. That's not what the prohibition against different treatment is concerned with. For a given account type, you have to treat customers who do not opt in the same as you treat those who do opt in except you don't provide your overdraft service for card transactions to the customer who does not opt in.

That's the whole point of the opt-in, isn't it?
Posted By: txbankgal

Re: Reg E Revisions Announced - 03/18/10 04:30 PM

WOW...I understand some of the regulator concerns but customers should have to take some responsibility for their own finances!

About 3 years ago we discontinued customer access to discretionary Overdraft Privilege lines using a debit card because we could not control whether or not non-proprietary ATMs would make the correct disclosures.

So here's the scenario I need help with:
We work on a positive balance file. If a debit card/ATM customer who has been approved for our "discretionary overdraft privilege plan" opts-in, and our core processing system allows for it, can we allow the customer access to their ODP line as long as the stated "positive balance file" balance remains their "actual balance" (not including the ODP line) without being concerned about alerting them at the time of each transaction that they are accessing their ODP?

Management is wanting to send a letter with the notice addressing this issue, which is considered to be an advertisement of ODP in my opinion, and thus we will have to include the 4 disclosure points...but my main concern is the access of the line thru their card.

Thanks for any help!
Posted By: Favre Fan

Re: Reg E Revisions Announced - 03/18/10 05:36 PM

I have read through the entire 9 page thread and I am still confused on one point. I believe it's just the "wording" but I would like for someone to clarify the following: What is a "courtesy pay program"? Does this mean that your bank, at the time of the transaction, routinly authorizes one time card transactions even though the funds are not available? Or does it mean that your bank does NOT authorize card transactions at the time of the request if the funds are NOT available BUT charges an overdraft fee for those items that sometime slide in under the radar? Is it the authorization at the time of the request or the fact that a fee is charged that would determine if you are a bank with a "courtesy pay program"?
Posted By: In the middle of it

Re: Reg E Revisions Announced - 03/18/10 06:20 PM

I'll chime in on this one. Our bank has been paying the transactions up to a ceratin limit set by account type. That's the "courtesy payment".
Posted By: Favre Fan

Re: Reg E Revisions Announced - 03/18/10 07:43 PM

In the Middle of it: Do you charge an overdraft fee for the service?
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/18/10 08:14 PM

Originally Posted By: txbankgal


So here's the scenario I need help with:
We work on a positive balance file. If a debit card/ATM customer who has been approved for our "discretionary overdraft privilege plan" opts-in, and our core processing system allows for it, can we allow the customer access to their ODP line as long as the stated "positive balance file" balance remains their "actual balance" (not including the ODP line) without being concerned about alerting them at the time of each transaction that they are accessing their ODP?

Management is wanting to send a letter with the notice addressing this issue, which is considered to be an advertisement of ODP in my opinion, and thus we will have to include the 4 disclosure points...but my main concern is the access of the line thru their card.

Thanks for any help!


Yes, assuming you have the capability, you can allow overdraft access at the ATM without revealing the "puffed" balance. Providing a transactional alert is among the Best Practices listed in the 2005 ODP Guidance, but it's not a regulatory requirement.

As for the letter, if it's promoting the opt-in, it will need the four statements you alluded to.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 03/18/10 09:36 PM

Fan,

The most you can expect from a monster thread is the answer to a few specific questions...not a learning experience.

"Bounce protection," "overdraft privilege," "courtesy pay" etc. are just marketing terms with no particularized meaning... Generally, they describe vendor designed overdraft programs that have been promoted to the customer.
Posted By: txbankgal

Re: Reg E Revisions Announced - 03/18/10 10:26 PM

Thanks for the clarification John!

One more quick question...

Would it be acceptable as confirmation to send 2 initial notices(one to be signed and returned and one stamped 'CONFIRMATION' to be kept as their required confirmaton) or does it have to be sent after they have made their election.

Thanks again!
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 03/19/10 10:26 AM

No. The proposed revisions make it clear that the opt-in does not take effect until the confirmation is sent after the opt-in is received. You cannot send it in advance.
Posted By: mstark

Re: Reg E Revisions Announced - 03/19/10 01:27 PM

The model form has a place for account numbers and a printed name. Two Questions.

1) Must the formed be signed or just printed?
2) Must all account numbers that a customer has debit cards on be listed in order to opt-in all those accounts. (Example: I have 2 checking accounts with 2 different debit cards must I list those or if i just list 1 does that opt me out of both?)
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/19/10 01:45 PM

There may be a way you can provide the confirmation in advance. Review Comment 17(b)-7:
Quote:
7. Written confirmation. A financial institution may comply with the requirement in § 205.17(b)(1)(iv) by providing to the consumer a copy of the consumer’s completed opt-in form or by sending a letter or notice to the consumer acknowledging that the consumer has elected to opt into the institution’s service. The written confirmation notice must include a statement informing the consumer of his or her right to revoke the opt-in at any time. To the extent the institution complies with the written confirmation requirement by providing a copy of the completed opt-in form, the institution may include the statement about revocation on the initial opt-in notice.
That suggests that the confirmation can simply be a copy of whatever written opt-in form the bank provided and the consumer used, that it can be provided (as opposed to sent), and that the whole ball of wax can be part of the bank's opt-in disclosure.
Posted By: JoAnne

Re: Reg E Revisions Announced - 03/19/10 02:08 PM

Let me see if I understand this confirmation thing:

If we include the right to revoke language on the opt-in notice and tell the customer that by checking the boxes on the opt-in form and send back to the bank or dropping off at a branch or calling, etc that completes the process, that can serve as the confirmation and we will not have to send another confirmation once we actually receive the opt-in form, call, etc. That would help where my operations people are telling me that the confirmation notice is being driven off a code on the system (confirm produced next morning) which same code is also telling the system that it is okay to charge od fees immedicately. (would be a violation if OD fees are charged before the actual confirmation notice is mailed)

In other words, if the confirmation can be part of the opt-in notice we do not have to send another confirmation before we can charge OD Fees?

Or are you saying, we can send the consumer a copy of the form they sent to us (if it includes the right to revoke language) instead of producing another letter and then we can start charging fees?
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/19/10 02:49 PM

You can go either way, IMO. If you will provide a copy of the opt-in form as your confirmation, make that copy a part of your mailing. In other words, include the original, which is to be sent back to you or dropped at a branch, and the copy, which the consumer is to retain. You can include the "right to revoke" language on both, but it would have to be on the customer copy. IMO, if you go that route, you can turn on the service as soon as you receive the opt-in (because the confirmation is already in the consumer's hands).

If you go the route of sending BACK a copy of the consumer's opt-in, you can't turn on the overdraft service until you send the copy.
Posted By: brainOverload

Re: Reg E Revisions Announced - 03/19/10 03:16 PM

John, I like that idea. That seems like the best way to go.
Posted By: ahou

Re: Reg E Revisions Announced - 03/19/10 03:35 PM

But the commentary says you may provide the consumer a copy of the "completed" opt-in form as a confirmation notice. I read "completed" to be the form filled out by the consumer.
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/19/10 03:47 PM

So you make the forms up in carbonless sets, and the customer's information goes through to the copy.
Posted By: smith

Re: Reg E Revisions Announced - 03/19/10 05:14 PM

We have had a question come up that has us stumped. We have electronic conversion conversion (ECK) transactions come through as both POS (through VISA) and as ACH transactions. For the transactions that come through as a POS transaction, would it be considered a check or a one-time debit transaction? It seems like the customer would expect it to be treated like a check (no opt-in necessary to pay it into overdraft and charge a fee) thought it is offically a POS transaction (opt-in would be required to pay into overdraft and charge the fee.)
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/19/10 08:59 PM

Not sure I understand how a check conversion would come in through Visa. However, if the transaction originated as a check, it's not a debit card transaction at all regardless of how it gets to you, so it would not be covered by the §205.17 requirements.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 03/21/10 11:32 AM

John,
I'll respectively, but firmly dissent to your response in #1360595, citing the same language you do.

Clearly, a bank can confirm the consumer's consent by "providing a copy of the consumer's completed opt-in form." However, at the time the bank provides the consumer with two copies of the notice, neither has been "completed;" i.e. it does not reflect the consumer's affirmative consent.

A contrary interpretation simply eliminates the confirmation requirement as a separate step.
Posted By: Kathleen O. Blanchard

Re: Reg E Revisions Announced - 03/21/10 04:29 PM

What about the subsequent suggestion to provide the opt-in form in carbonless sets, providing a copy the consumer can keep with one returned to the bank? Purely from a regulatory standpoint, it seems they would have a copy they can keep...cost considerations (carbonless sets vs postage of mailing confirms is a separate discussion).
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 03/22/10 09:12 AM

Regardless of the medium, I don't think the idea that providing everyone with a confirmation (including those that do not opt-in) is compliant. As silly as I think this requirement is, the supplementary information accompanying the regulation indicates they believe it serves a purpose:

The Board believes that written confirmation will help ensure that a consumer intended to opt into the overdraft service by providing the consumer with a written record of his or her choice. This is particularly important when a consumer opts in by telephone.

Posted By: dickr

Re: Reg E Revisions Announced - 03/22/10 05:34 PM

I'm working with a bank whose ATMs/debit cards are not working with live, updated balances. In essence, a customer can withdraw the same funds from an ATM and a teller, since neither one will know what the customer did until the transactions are posted. ATM and debit card transactions are approved if the balance requested is available, and declined if the amount requested exceeds the last known balance. Therefore, we have no choice but to pay the transaction and overdraw the account.

Does the 'opt-in' requirement apply? If so, why would a customer opt-in if the only result is that he can be charged?
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/22/10 07:17 PM

Your bank would appear to qualify for the §205.17(b)(4) exemption from the opt-in requirements, since you don't provide overdraft service for ATM and one-time debit card transactions. In the event you have to pay an ATM or one-time debit card transaction that overdraws an account, you will be prohibited from assessing any overdraft fees, however, because you don't have an opt-in.
Posted By: dickr

Re: Reg E Revisions Announced - 03/22/10 07:29 PM

Thanks - that's how I read it. At least the loss of income will be partly offset by the savings in postage!
Posted By: ktac MITCH

Re: Reg E Revisions Announced - 03/22/10 09:08 PM

Am I just missing it?
I have looked in 205.17 and in the Model Opt-in form, but I don't see any "Model Language" for the Right of Revocation.
Posted By: ahou

Re: Reg E Revisions Announced - 03/22/10 09:32 PM

No, there is no model language.
Posted By: JobSecurity

Re: Reg E Revisions Announced - 03/22/10 09:57 PM

Has anyone seen any updates regarding the honoring of an opt-out choice? The reg said that "if an existing account holder contacts his or her financial institution in reponse to the opt-in notice before August 15, 2010 to express a desire not to opt in the Board expects the insitution would honor the consumer's choice at that time". It appears our core system won't be able to handle these changes until the last minute. We would like to start getting these in the mail soon. Should we wait? How are other banks handling this?
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/23/10 12:03 PM

Just to clarify Deb G's post -- it's not the regulation or the Official Staff Interpretations that she has quoted. Instead, those words are found tucked away on page 59047 (the 15th page of the PDF document) of the Federal Register document in the Federal Reserve Board's Section-by-Section Analysis of §205.17(c) (Timing). That language gives you an expectation of what the Fed's stance is on the issue, but it's not certain that examiners will focus on it. I can only note that the Fed did not mention that statement when it published its proposed clarifying amendments on March 1. Whether that's significant or not, I have no idea.
Posted By: ahou

Re: Reg E Revisions Announced - 03/23/10 12:33 PM

The commentary states:
17(c) Timing
1. Early compliance. A financial institution may provide the notice required by § 205(b)(1)(i) and obtain the consumer’s affirmative consent to the financial institution’s overdraft service for ATM and one-time debit card transactions prior to July 1, 2010, provided that the financial institution complies with all of the requirements of this section. [section being section 17]

This makes it seem you must be ready to fully comply.
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 03/23/10 02:12 PM

I know the regulations allows for this to be delivered electronically if the consumer consents. Can we add a line on the disclosure for email address and state that confirmation will be delivered via email? Otherwise, how can we obtain their consent?
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/23/10 02:46 PM

Your could put something like "If you supply your email address below, we will send our confirmation of your opt-in decision to you electronically" on the form to be used for the customer's opt-in.
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 03/23/10 02:54 PM

Thanks that is what I thought but wanted to make sure we could add something like this.
Posted By: The OG Zaibatsu

Re: Reg E Revisions Announced - 03/23/10 03:07 PM

Has anyone thought of a way to boost response rates to the opt-in notices? I can't help but think that they'll be mostly ignored.
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 03/23/10 03:36 PM

We are planning on following up with phone call XX days after the mailing for customers who have not responded. We feel our best selling point will be with direct contact with customers.
Posted By: JobSecurity

Re: Reg E Revisions Announced - 03/23/10 03:45 PM

We are planning follow up calls also. Hope someone has some additional ideas that would be good.
Posted By: lmaizel

Re: Reg E Revisions Announced - 03/23/10 04:14 PM

Within xx days of our initial mailing, for customers that have not responded and have used our OD service on more than 2 occasions for POS transactions in the past 6 months, we plan on follow up phone calls, targeted second and possibly third mailings and email blasts. Our core system also allows for Dynamic Messaging that will alert tellers while the customer is at their window to the fact that a particular customer has not opted in. This will give them an opportunity to talk face to face.
Posted By: ktac MITCH

Re: Reg E Revisions Announced - 03/23/10 04:40 PM

Just Had a Thought ?!?!?!!?
The model opt-in form says . . ."We will charge you a fee of upt to $30 each time we pay an overdraft". For our example lets say we customize this to my bank and it says the fee is $29.

What about when our bank wants to increase the NSF / OD fees at some point in the future??????, say up to $33.

1. Will these customers who have opted in be grandfathered and stay at $30?
2 A. By sending the required change in terms notice for the fee change, would that cover the increase for the opt-ins?
OR 2 B. Would we have to get all who opted-in to sign a new opt-in at the higher fee?

WOW - - now my head really hurts
Posted By: ahkcompliance

Re: Reg E Revisions Announced - 03/23/10 05:36 PM

I am trying to come up with scripts for our call center and customer service people but hard to think of all possible questions...does anyone have something like this they would be willing to share?
Posted By: JobSecurity

Re: Reg E Revisions Announced - 03/23/10 06:18 PM

Some of the employees here have been looking into the marketing side of this and trying to decide how we need to approach the changes. The question I have is some of them have said that the webinars they have attended have suggesting "checking with legal counsel if a small business is affected". Does anyone have a thought on why they are suggesting this if Reg E is on consumer accounts for personal, family, and household purposes?????? I don't know how to answer this question when I am asked.
Posted By: The OG Zaibatsu

Re: Reg E Revisions Announced - 03/23/10 06:23 PM

Originally Posted By: ktac MITCH
Just Had a Thought ?!?!?!!?
The model opt-in form says . . ."We will charge you a fee of upt to $30 each time we pay an overdraft". For our example lets say we customize this to my bank and it says the fee is $29.

What about when our bank wants to increase the NSF / OD fees at some point in the future??????, say up to $33.

1. Will these customers who have opted in be grandfathered and stay at $30?
2 A. By sending the required change in terms notice for the fee change, would that cover the increase for the opt-ins?
OR 2 B. Would we have to get all who opted-in to sign a new opt-in at the higher fee?

WOW - - now my head really hurts


You won't have to get them opted in again, but that wouldn't be a bad change to the model form, i.e. to explain that the fees can increase OR to say that this is what the fee currently is. If your customer doesn't like the fee increase, they can revoke the opt-in at any time.
Posted By: Runreb

Re: Reg E Revisions Announced - 03/23/10 11:15 PM

Let's say a customer is opening a new account in person at a branch. I provide the customer with the disclosure with the opt-in option at the bottom of the form. She checks either I do want you to pay overdrafts or I do not want you to pay overdrafts and she signs and dates the form. If she checks I do, then, I could provide her with a copy of the form while she is in the branch and meet the affirmative consent requirement, is that correct?
Posted By: ktac MITCH

Re: Reg E Revisions Announced - 03/24/10 03:51 PM

Originally Posted By: Runreb
Let's say a customer is opening a new account in person at a branch. I provide the customer with the disclosure with the opt-in option at the bottom of the form. She checks either I do want you to pay overdrafts or I do not want you to pay overdrafts and she signs and dates the form. If she checks I do, then, I could provide her with a copy of the form while she is in the branch and meet the affirmative consent requirement, is that correct?

That is correct - just make sure their copy has language that informs them of their right to revoke their decision.
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/25/10 02:20 PM

Originally Posted By: Deb G
Some of the employees here have been looking into the marketing side of this and trying to decide how we need to approach the changes. The question I have is some of them have said that the webinars they have attended have suggesting "checking with legal counsel if a small business is affected". Does anyone have a thought on why they are suggesting this if Reg E is on consumer accounts for personal, family, and household purposes?????? I don't know how to answer this question when I am asked.


For a lot of banks, the line between business accounts and household accounts is fuzzy, particularly for customers who use personal accounts to operate a small sole proprietorship business. Trying to determine whether an account is primarily for personal, family or household purposes can be hairy. For that reason, bank counsel may suggest that account contracts for household accounts include language stating that the customer agrees that the account is being opened for, and will be used only for, personal, family or household purposes.

It's simply smart to draw a sharp line separating the accounts to which you have to provide Reg E protections and those you don't.
Posted By: JobSecurity

Re: Reg E Revisions Announced - 03/25/10 05:55 PM

Thank you John. It does make sense to make it clear between personal and business purpose. Of course our disclosures do not have any language to that effect (imagine that, something else to worry about).
Posted By: Kahola

Re: Reg E Revisions Announced - 03/25/10 11:13 PM

On the Federal Reserve's web site it states that soon banks will be sending consumers information regarding overdrafts and then refers them (consumers)to the model form. If a bank denies ATM and POS transactions and does not charge why would need to send our customers the model form?
Posted By: rlcarey

Re: Reg E Revisions Announced - 03/26/10 12:58 AM

You wouldn't.
Posted By: banker-12

Re: Reg E Revisions Announced - 03/29/10 07:51 PM

If the customer later revokes the opt-in, do we need to have it in writing? Is verbally okay? Do we need to retain proof or document when they revoked the opt-in?

We will include the right to revoke statement on the opt-in form and give customer a copy as written confirmation of the opt-in.

Can the right to revoke statement be at the end (after signature lines) of the opt-in form? or prior to the signature lines.

thanks,
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/29/10 08:12 PM

You are supposed to provide revocation capabilities via the same channels you used for opt-in (although that's patently impossible for opt-ins obtained as part of new account paperwork) -- see 205.17(f). So if you allowed the consumer to give you an opt-in orally, you should provide the consumer the ability to revoke it orally.

As for documentation, you should document your procedures and I recommend logging any revocation requests. But there's no requirement that you retain "proof" of individual opt-ins or revocations.

There is no specified place for the notice of right to revoke. The regulators will like it better if it's conspicuous, and it's better, I think, if it's above the signature line on the opt-in form, because it's more likely to be seen there. That's just an opinion.
Posted By: banker-12

Re: Reg E Revisions Announced - 03/29/10 10:40 PM

If we mail the opt-in notices early,include the below statement on the opt-in notice and an existing customer informs us prior to August 15 that they do not want to opt-in, do we need to stop accessing the fee for any ATM and one-time debit card transactions or do we stop charging the fee until after August 14 because we mentioned the effective date on the notice.

The statement reads "After August 14, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below): ATM transactions and everyday debit card transactions"

thanks,
Posted By: banker-12

Re: Reg E Revisions Announced - 03/30/10 06:58 PM

If we mail the opt-in notices early, include the below statement on the opt-in notice (mentioned on the webinar)and an existing customer informs us prior to August 15 that they do not want to opt-in, do we need to stop accessing the fee at that time or until after August 14 because we mentioned the effective date on the notice.

The statement reads "After August 14, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below): ATM transactions and everyday debit card transactions"

thanks,
Posted By: John Burnett

Re: Reg E Revisions Announced - 03/30/10 08:26 PM

There are two reasons that you should promptly stop assessing OD fees for ATM and one-time debit card transactions in that customer's account.

First, there is the requirement in the regulation that says if you start compliance with the regulation early, you have to comply with all the regulation's provisions, and one of those provisions is to act a promptly as reasonably practicable when a customer revokes an opt in (which is arguably the same as opting out).

Second, there is the statement in the first column of the fifteenth page of the Federal Register document in which the final regulation was published that says that it is the [Federal Reserve] Board's expectation that you'd act promptly.

Whether your regulator will take the same view as the Fed Board is the unknown.
Posted By: bstritecky

Re: Reg E Revisions Announced - 04/12/10 01:37 PM

Originally Posted By: _Zaibatsu_
Has anyone thought of a way to boost response rates to the opt-in notices? I can't help but think that they'll be mostly ignored.



does anyone see an issue with having an employee incentive program to increase the number of opt ins?
Posted By: QueenBB

Re: Reg E Revisions Announced - 04/14/10 09:57 PM

My bank has an ODP service. Then, there are those customers who do not qualify/do not want the service. Do we send opt-in notices to that group? Even though they have no OD service/balance/allowance, there are times when they manage to overdraw their account with a card.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 04/15/10 09:22 AM

Becky,
Incenting employees to sell an opt-in is a workable option. The warning is that it cannot be an element in an overall plan to mislead or abuse the customer. Your bank should provide scripts to its sellers and mandate that they follow them. Expect that your scripts will be subject to third party review.

We are months away from the first on-site examination on this topic. No examination procedures have been published. However, I've heard rumblings about a major thrift that is on the precipice of an enforcement action because of the way they have handled their promotion of overdrafts in the past. A friend operates sort of a voluntary "clipping service" for me where he sends links to lawsuits filed against banks that have aggressively promoted overdraft services.

It's "open season" and you want to avoid being a target. An aggressive promotion will not "violate" this regulation. What you want to assure is that it does not sink to the level of an unfair and deceptive practice in the eyes of your reviewer. (In candor, the biggest variable here is "Who is your reviewer?")

There is a thread in the Private Forum that describes what appears to be an effective promotional program. I see no indicators there that the bank is overreaching its customers.

Only Pollyanna would just mail the A-9 and expect a significant number of customers to mail it back.
Posted By: Elwood P. Dowd

Re: Reg E Revisions Announced - 04/15/10 09:34 AM

Queen BB,

Banks that promote overdrafts need to divorce their Reg E opt-in decision from that fact. Unless your promotions indicate you will honor allow overdrafts via ATM and debit cards, there is no real conflict.

Banks that promote overdrafts do not promise the customer that an NSF item will be paid. Banks that obtain a customer opt-in in response to an A-9 do not promise the customer that an NSF item will be paid. Both the overdraft promotion and the A-9 solicitation are inherently deceptive. However, the second one is sanctioned by the federal government.

The fact that a customer does not "qualify" for a promoted overdraft service has nothing to do with the fact he is overdrawn this morning because of a systemic weakness. The issue is whether or not your bank wants to collect the fee.



Posted By: ahkcompliance

Re: Reg E Revisions Announced - 04/15/10 12:33 PM

Managment had now decided to increase our NSF fees. I already have our Opt in notice prepared with our old fee. We are planning on mailing our opt in requirements on May 1 and the new fee takes effect June 1. We will do our change in terms 30 day prior. My question is is it okay if the notice states the old fee?
Posted By: QueenBB

Re: Reg E Revisions Announced - 04/15/10 02:28 PM

My bank does not promote ODs, but there are times when a card purchase (gas at the pump, for example) is authorized, then another item clears the system first - leaving the card purchase ODing the account. No choice but to pay the card, as it was authorized with sufficient balance and no way to return/decline it after the fact. So, my question is whether or not to send the OD notice to those folks who are not in the formal ODP. They are just plain ole folk who used their card, was authorized, but at time of clearing the account does not have the funds. It looks to me like having the notice sent to them would at least allow us to charge them for the OD in their account caused by this card transaction.
Posted By: AuditorK

Re: Reg E Revisions Announced - 04/15/10 02:42 PM

QueenBB,

We are in the same boat, so to speak. I don't know how you could word the opt-in notice in order to get someone to opt-in to a charge in this circumstance. We don't actually offer a service to opt-in to. Who would opt-in if they are told that the transaction would have to be paid regardless of whether we can charge them?
Posted By: Linkpars

Re: Reg E Revisions Announced - 04/16/10 04:40 PM

Does anyone have an opinion about opting-in over the phone?
Posted By: brainOverload

Re: Reg E Revisions Announced - 04/16/10 05:33 PM

We are going to allow it as long as we can verify the customer's identity.

We are going to allow it all...mail, phone, online, email, in person. We want it to be convenient for the customer.
Posted By: Linkpars

Re: Reg E Revisions Announced - 04/16/10 06:50 PM

While we want it to be convenient for our customer too, I have to wonder about the security of the issue. I mean with identiy theft. I know we are going to verify as much as we can over the phone, but you really never know who you are talking too. It just makes me nervous.
Posted By: Wonder Why?

Re: Reg E Revisions Announced - 04/16/10 07:06 PM

We will permit telephone opt-ins as well and will follow our normal customer identification procedures for any telephone transaction.
The written confirmation mailed to the address of record for the account should negate any issues with identity theft.
Posted By: brainOverload

Re: Reg E Revisions Announced - 04/16/10 07:12 PM

Originally Posted By: Linkpars
While we want it to be convenient for our customer too, I have to wonder about the security of the issue. I mean with identiy theft. I know we are going to verify as much as we can over the phone, but you really never know who you are talking too. It just makes me nervous.


Don't you give account information over the phone to your customers? In my own opinion that seems more risky than this. What ever you do to identify your customers when they call for account information you could use the same measures with the opt-in wouldn't you agree.
Posted By: Linkpars

Re: Reg E Revisions Announced - 04/16/10 07:47 PM

That is what I plan on doing. I have created a checklist with the 5 privacy questions to assist in the determination of the customer's identity. We are planning on following the same procedures for CIP, I was just wanting some opinion.
Posted By: Valley Girl

Re: Reg E Revisions Announced - 04/19/10 01:15 PM

The notice has a segregation requirement. Would it be acceptable to mail this with information regading the bank's Overdraft Defender program? I just thought the segregation requirement prohibited institutions from included the opt-in with other consents. Is that correct?
Posted By: John Burnett

Re: Reg E Revisions Announced - 04/19/10 01:39 PM

Originally Posted By: Valley Girl
The notice has a segregation requirement. Would it be acceptable to mail this with information regading the bank's Overdraft Defender program? I just thought the segregation requirement prohibited institutions from included the opt-in with other consents. Is that correct?


The segregation requirement just requires that you not include other information on the opt-in disclosure. There is a footnote in the Federal Register document that specifically says it's OK to include other material in the mailing (if you do a mailing), but it must be on a separate document. Make very sure, though, that your Overdraft Defender program material complies with Reg DD section 230.11(b) requirements.
Posted By: John Burnett

Re: Reg E Revisions Announced - 04/19/10 01:45 PM

Originally Posted By: ahkcompliance
Managment had now decided to increase our NSF fees. I already have our Opt in notice prepared with our old fee. We are planning on mailing our opt in requirements on May 1 and the new fee takes effect June 1. We will do our change in terms 30 day prior. My question is is it okay if the notice states the old fee?


I don't think so. That schedule says you will be sending out conflicting fee information within one or two days. The right hand and left hand at your bank need to get together and coordinate things better. Sending out the opt-in notice with stale fee information without knowing abut the fee increase is one thing (and regulators might not like it in spite of the excuse), but knowingly sending it out with stale fee information will be looked upon as a problem, and your opt-in process could be declared invalid.

Save your regulator the trouble of writing your bank up for the violation and have the disclosures re-done with the new fees, even if it means you'll need to postpone the "roll-out" from May 1 to May 15 or so.
Posted By: Valley Girl

Re: Reg E Revisions Announced - 04/19/10 01:45 PM

Thanks John!
Posted By: Wonder Why?

Re: Reg E Revisions Announced - 04/19/10 03:42 PM

We have a difference of opinion at my FI regarding what constitutes a "separate document"
Could a cover letter accompanying the A-9 notice be on the reverse side or should it be a completely separate piece of paper?

How have other FIs interpreted this?
Posted By: NCBanker

Re: Reg E Revisions Announced - 04/19/10 06:54 PM

I'm trying to figure out what law or regulation dictates the minimum payment we can charge on our overdraft courtesy coverage plan. I'm thinking state law? (NC in my case). Is that correct?
Thank you.
Posted By: brainOverload

Re: Reg E Revisions Announced - 04/22/10 02:29 PM

Ken you mentioned in a recent Compliance Update School that sending a letter along with the opt-in form to the customers may be an advertisement promoting the payment of overdrafts and if so must include those 4 specific items spelled out in the reg. We were thinking of using a similar letter to one that one of our upper mgmt received from their "other" bank. I would like to have you look at it and advise if it is what you are talking about but I do not know if I can attach it to this post and I see that you do not take PM's. Any suggestions?
Posted By: Reed

Re: Reg E Revisions Announced - 04/22/10 07:09 PM

Maybe this has been discussed already, but I can't find it.

For accounts with repeat debit/ATM card initiated overdrafts that have not opted in after 7/1 (because the bank is not live or gas station $1 approval scenario), is there anything wrong with revoking card privileges?
Posted By: Wonder Why?

Re: Reg E Revisions Announced - 04/22/10 08:26 PM

Spin
My understanding is if you revoke the card due to overdrafts for those who don't opt in after X# of overdrafts you would also have to revoke the card for opt-ins after the same number of overdrafts.

We are not permitted to treat opt-outs any differently than opt-ins except for the dollar limit at which we authorize transactions.

Sorry to be the bearer of bad tidings.
Posted By: Wino Banker

Re: Reg E Revisions Announced - 04/23/10 04:26 PM

Regarding opt-outs: it appears Reg E does not require written confirmation when the customer opts-out. Written confirmation is only required upon opting-in.

Is this correct? Thanks!
Posted By: John Burnett

Re: Reg E Revisions Announced - 04/23/10 04:59 PM

Originally Posted By: Wino Banker
Regarding opt-outs: it appears Reg E does not require written confirmation when the customer opts-out. Written confirmation is only required upon opting-in.

Is this correct? Thanks!


Correct. I imagine the fact that the next time the customer attempts to OD with the card it won't work will be sufficient notice. wink
Posted By: Wino Banker

Re: Reg E Revisions Announced - 04/23/10 05:32 PM

Thank you for your prompt response. It's always nice to validate my sometimes erratic thoughts with others.
Posted By: Banker Gal

Re: Reg E Revisions Announced - 04/23/10 06:18 PM

John,
We had attended a webinar in which we had in our notes that a confirmation number had to appear on the confirmation notice to the customer. Is this in the final ruling?
Thanks
Posted By: NB569

Re: Reg E Revisions Announced - 04/23/10 07:15 PM

Are there any banks out there that do not allow bounce protection for the first 30 days after account opening? We are trying to figure out exactly how we handle the opt-in in those situations. Can we have the customer complete the opt-in at account opening and then just wait the 30 days to send the confirmation or do we have to wait 30 days to even offer the opt-in?
Posted By: John Burnett

Re: Reg E Revisions Announced - 04/23/10 08:16 PM

Originally Posted By: Banker Gal
John,
We had attended a webinar in which we had in our notes that a confirmation number had to appear on the confirmation notice to the customer. Is this in the final ruling?
Thanks


Huh? Nowhere in the regulation is there a mention of a "confirmation number." I know, because modern technology allows me to do a global search of the reg for that phrase. Methinks the webinar presenter thought that might be a good idea and somehow someone recorded that thought as a requirement. Just ain't so.
Posted By: zitch70

Re: Reg E Revisions Announced - 04/27/10 01:28 PM

Originally Posted By: NB569
Are there any banks out there that do not allow bounce protection for the first 30 days after account opening? We are trying to figure out exactly how we handle the opt-in in those situations. Can we have the customer complete the opt-in at account opening and then just wait the 30 days to send the confirmation or do we have to wait 30 days to even offer the opt-in?


We do not allow new customers to participate in the overdraft program until 60 days after the account is open. They have to qualify.

but we will be having them opt in at account opening.
Posted By: NB569

Re: Reg E Revisions Announced - 04/27/10 02:30 PM

Originally Posted By: zitch70
Originally Posted By: NB569
Are there any banks out there that do not allow bounce protection for the first 30 days after account opening? We are trying to figure out exactly how we handle the opt-in in those situations. Can we have the customer complete the opt-in at account opening and then just wait the 30 days to send the confirmation or do we have to wait 30 days to even offer the opt-in?


We do not allow new customers to participate in the overdraft program until 60 days after the account is open. They have to qualify.

but we will be having them opt in at account opening.


So will you be giving out the confirmation at that time as well or will it be sent after the 60 days?
Posted By: Valley Girl

Re: Reg E Revisions Announced - 04/27/10 03:02 PM

An illustration of a modified notice included language regarding returned item fees and merchant fees. For example, "If we do not authorize and pay an overdraft your transaction will be declined and/or returned to the merchant/payee. If declined, you may be required by the merchant/payee to provide an alternative form of payment at the time of transaction. If returned, we may charge you an insufficient funds fee of $X per item. In addition, you may incur additional return item fees imposed by the merchant/payee."

Would this language be appropriate since ATM/debit card transactions cannot be returned? I see that 205.17(d)(6) states:
(6) Permitted modifications and additional content. If applicable, the institution may modify the content required by § 205.17(d) to indicate that the consumer has the right to opt into, or opt out of, the payment of overdrafts under the institution’s overdraft service for other types of transactions, such as checks, ACH transactions, or automatic bill payments; to provide a means for the consumer to exercise this choice; and to disclose the associated returned item fee and that additional merchant fees may apply. The institution may also disclose the consumer’s right to revoke consent. For notices provided to consumers who have opened accounts prior to July 1, 2010, the financial institution may describe the institution’s overdraft service with respect to ATM and one- time debit card transactions with a statement such as “After August 15, 2010, we will not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below).”

I interpret the above to mean that you would disclose returned item fees/merchant fees only if you modify the notice to allow consumers to opt into or opt out of payment of other items, such as checks, ACH, etc.
Posted By: John Burnett

Re: Reg E Revisions Announced - 04/27/10 08:29 PM

VG - Agree. All that extra information may be included in an accompanying document, but it doesn't belong in the notice, IMO.

It looks to me that what they are trying to do is combine all of the "what ifs" for both card transactions and check/ACH transactions into one statement. That makes it harder to understand, IMO, and that's contrary to the goals of the regulation.
Posted By: Valley Girl

Re: Reg E Revisions Announced - 04/27/10 09:04 PM

Thanks John!!
Posted By: zitch70

Re: Reg E Revisions Announced - 04/27/10 09:23 PM

Originally Posted By: NB569
Originally Posted By: zitch70
Originally Posted By: NB569
Are there any banks out there that do not allow bounce protection for the first 30 days after account opening? We are trying to figure out exactly how we handle the opt-in in those situations. Can we have the customer complete the opt-in at account opening and then just wait the 30 days to send the confirmation or do we have to wait 30 days to even offer the opt-in?


We do not allow new customers to participate in the overdraft program until 60 days after the account is open. They have to qualify.

but we will be having them opt in at account opening.


So will you be giving out the confirmation at that time as well or will it be sent after the 60 days?


We will be fliping the switch when the account is opened That way it is on the system.
Posted By: michaelj

Re: Reg E Revisions Announced - 04/28/10 02:09 PM

when sending an opt in to customers, can't we just have a response needed on the bottom to opt in to the payment of ATM/POS if the notice is stating after Aug. 15 we will not authorize and pay overdrafts for ATM/POS. Is there really a need to have the Opt out choice???
Posted By: John Burnett

Re: Reg E Revisions Announced - 04/29/10 12:05 AM

The opt-out line on the model form is not required by the regulation.
Posted By: Valley Girl

Re: Reg E Revisions Announced - 04/29/10 08:40 PM

Are there any advantages to sending the opt in form to existing customers before July 1? I worry that if the notices are sent early; some customers may express their desire not to opt in and then the bank would have to honor their choice at that time.

So if you send notices June 15 to existing customers; you may have a few that "opt out" as of June 17 and therefore the bank would have to stop assessing fees at that time. Whereas, if you wait until July 15 to send notices then you have more time to collect fees before they opt out.

In addition, your software would have to be ready to handle the changes at the time you start sending notices.
Posted By: Compliance Audit

Re: Reg E Revisions Announced - 04/29/10 10:45 PM

If we currently have an overdraft protection plan that allows for the payment of ACH, checks AND ATM and one time debits, and the customer chooses to opt out for the payment of ACH and one time debit transactions do we still have to offer them the overdraft service to pay checks, ACH and reoccuring debit transactions or can we just cancel their overdraft protection plan for everything.
Posted By: ahou

Re: Reg E Revisions Announced - 04/29/10 11:00 PM

You can't treat the consumer differently because he does not opt in to ATM & one-time debit card trans.
Posted By: Oviedo Boy

Re: Reg E Revisions Announced - 05/11/10 07:08 PM

Adding on to what Compliance Audit asked, if our Overdraft Courtesy program currently covers checks, ACH, one-time and recurring debit card transactions, and a customer does not Opt In, are we permitted to prohibit the customer from using this Overdraft Courtesy for ATM and one-time debit transactions (if our system will allow that)?
Posted By: Anonymous

Re: Reg E Revisions Announced - 05/11/10 07:12 PM

see ahou's answer above.
Posted By: Oviedo Boy

Re: Reg E Revisions Announced - 05/11/10 07:56 PM

Ok...so, we would need to continue allowing debit card users to access their Overdraft Courtesy, but just not charge them for it, unless they Opted In?
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/11/10 08:02 PM

That's one option, but it won't be popular with management, will it? You need to force the issue and get the ability to selectively turn on coverage for ATM and one-time debit card transactions at the account level.
Posted By: brainOverload

Re: Reg E Revisions Announced - 05/12/10 02:55 PM

I have questions about the opt-in notice:

Management is wanting to incorporate our courtesy overdraft protection plan (where we pay overdrafts of any kind up to $500 and charge (except ATM and one-time debit card transactions unless they opt-in and is not an loc)). They want the notice to say under the What are the standard overdraft practices that come with my account? section: "We DO authorize and pay overdrafts up to $500 for the following types of transactions:" Is it ok to have that "up to $500" in there?

They also do not want an opt-out option at the bottom, just opt-in...is that ok?
Posted By: Deena

Re: Reg E Revisions Announced - 05/12/10 08:32 PM

I think it's fine to say "up to $500." It's also fine to not include the opt-out since that's not required.
Posted By: brainOverload

Re: Reg E Revisions Announced - 05/12/10 08:41 PM

Originally Posted By: brainOverload
I have questions about the opt-in notice:

Management is wanting to incorporate our courtesy overdraft protection plan (where we pay overdrafts of any kind up to $500 and charge (except ATM and one-time debit card transactions unless they opt-in and is not an loc)). They want the notice to say under the What are the standard overdraft practices that come with my account? section: "We DO authorize and pay overdrafts up to $500 for the following types of transactions:" Is it ok to have that "up to $500" in there?

They also do not want an opt-out option at the bottom, just opt-in...is that ok?

Sorry did not see John's post #1383374 with regard to the opt-out option. I looked, but looked right over it...

We decided after all to leave off the "up to $500".
Thanks
Posted By: Tryin-2-Comply

Re: Reg E Revisions Announced - 05/12/10 09:41 PM

I have a question regarding fees on debit card / ATM transactions. When we pay our items we pay largest to smallest - the problem we have is during our testing - this is what we have.

Bal. $45.00
ck $3.00 - cleared after the pre-auths
pre-auth debit $12.00
pre-auth debit $42.00
pre-auth debit $10.00

Operations is telling me that we pay largest to smallest - and i agree, however, they are telling me that we would only charge 1 NSF fee because of some regulation - because the customer had enough money to cover the two debits and can only be charged for the one that they didn't have enough money for.

I cannot find anything related to this - but they say this was back in 2002 or 2003.

If our deposit agreement states we pay largest to smallest and the customer opts-in to REG E - then, why can't we charge for the two items that cleared later when they didn't have enough money to cover those items.

Any help is appreciated.
Posted By: Reads Regs

Re: Reg E Revisions Announced - 05/13/10 05:00 PM

Could it be a state law issue? I don't recall anything on the Federal level from 2002 or 2003 that would affect this. The agencies came out with their best practices guidance on overdraft protection in February 2005 that suggested you disclose your posting order and perhaps limit the total number of overdraft fees charged per day.
Posted By: BNKO

Re: Reg E Revisions Announced - 05/14/10 02:15 AM

We have an overdraft privilege service that checking account customers are automatically enrolled in after 30 days of opening a new account. They are provided a brochure on this service at account opening and can opt-out of this service if they want to.

Due to the new Reg E opt-in requirements, management wants to change the current process from automatically enrolling to having the customer opt-in/opt-out of the overdraft privilege service at time of account opening.

My question is this: Can we combine the overdraft privilege opt-in/opt-out disclosure with the Reg E opt-in disclosure (ATM and one-debit transactions), or would we need to provide two separate disclosures?

Thanks
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/14/10 02:04 PM

Two separate disclosures, because you can't include extra info in the Reg E opt-in disclosure. You can include them in the same set of disclosures, I think, so long as they are clearly separate undertakings in the forms. Make very sure that the consumer can see that opting into the OD privilege service is one step that won't cover card transactions, and that opting into coverage for card transactions is an "add on," like ordering a moon roof in a new car.
Posted By: BNKO

Re: Reg E Revisions Announced - 05/14/10 02:41 PM

Thanks, John.
Posted By: dcl1963

Re: Reg E Revisions Announced - 05/17/10 06:16 PM

I saw the earlier discussion that the confirmation of opt-in can be a "carbon" of the opt-in or form or a mail out. Just curious of what some of you will do, copy of opt-in, letter or post card. We are leaning toward mailing a post card to the customers who opt-in but are working on the wording to comply but not give too much information since it is a post card.
Posted By: Bullseye

Re: Reg E Revisions Announced - 05/17/10 06:27 PM

Originally Posted By: DCL, CRCM
I saw the earlier discussion that the confirmation of opt-in can be a "carbon" of the opt-in or form or a mail out. Just curious of what some of you will do, copy of opt-in, letter or post card. We are leaning toward mailing a post card to the customers who opt-in but are working on the wording to comply but not give too much information since it is a post card.


We are making a copy of the opt-in which lists their intentions, account number and has their signature. We are dropping it in an envelope with the revoke as a stuffer.
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/17/10 06:57 PM

Originally Posted By: DCL, CRCM
I saw the earlier discussion that the confirmation of opt-in can be a "carbon" of the opt-in or form or a mail out. Just curious of what some of you will do, copy of opt-in, letter or post card. We are leaning toward mailing a post card to the customers who opt-in but are working on the wording to comply but not give too much information since it is a post card.


My personal opinion (and it really is just my opinion) is that a post card might be less expensive, but I wonder whether it's the best choice. How can you provide the customer the needed information for the opt-in without letting any casual reader of the card know that the customer has an account with you?
Posted By: dcl1963

Re: Reg E Revisions Announced - 05/17/10 08:31 PM

Thank you for the replies; and John, that is the problem we are addressing right now regarding the all eyes can see the info on the postcard. We were given the sample on Friday and are concerned about it; also pricing a self mailer instead of a post card.
Posted By: West_Delta

Re: Reg E Revisions Announced - 05/18/10 03:59 PM

John,

I may have missed this somewhere, but can an email sent to a customer constitute "written confirmation", or does this confirmation need to be mailed or delivered in person?

Thanks,

WD
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/19/10 03:33 PM

Straight from the regulation, Regulation E, §205.17(b)(1)(iv):

(iv) Provides the consumer with confirmation of the consumer’s consent in writing, or if the consumer agrees, electronically, which includes a statement informing the consumer of the right to revoke such consent.

The consumer's consent does not need to be obtained via the cumbersome "demonstrative consent" provisions of E-SIGN. For example, if your consumer has orally opted in using a telephone call, and provides you with his or her email address and says you can send the confirmation by email, you have all the consent you need to do so.
Posted By: dcl1963

Re: Reg E Revisions Announced - 05/19/10 09:24 PM

Regarding notification to existing customers. The Model form gives the box "I do not want" (opt-out)and the "I want"(opt-in). Is it alright to only have a box "I want"? In other words, no response equals "I do not want to pay". All accounts opened prior to 7/1/10 will be set as "I do not want to pay" on our core system unless and until we receive the opt-in. I understood that it is best to follow the model form but maybe I'm wrong.
Posted By: auditgirl6

Re: Reg E Revisions Announced - 05/19/10 10:31 PM

Here is a silly question:
My bank has decided to not participate in the opt in program. Would we be able to at a later time? I haven't read anything that states "now or never".
Posted By: Deena

Re: Reg E Revisions Announced - 05/20/10 11:39 AM

The "I do not want" is not required. It's fine to just have one box for the customer to opt-in.
Posted By: Deena

Re: Reg E Revisions Announced - 05/20/10 11:41 AM

I see no reason why you couldn't decide later to implement a program, as long as you follow the reg at that time.
Posted By: dcl1963

Re: Reg E Revisions Announced - 05/20/10 03:23 PM

Thanks Deena! I read your answer after I finished re-reading the reg again and some BOL training material and now understand that the "I do not want" is not required.
Posted By: brainOverload

Re: Reg E Revisions Announced - 05/20/10 07:29 PM

I hope this has not been asked already and I apologize if it has but, I need some reassurance in our decision...

We want to automaticaaly opt-out our Sr account customers and not even send them an opt-in notice. We just won't ever charge them for any ATM or one time debit card transactions that may overdraw their account. Does anyone see any problem with that scenario?
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/20/10 10:01 PM

Nope. Just make sure you step through the right disclosures, etc., if one of those seniors requests overdraft service for card transactions and you decide to give in.
Posted By: cle

Re: Reg E Revisions Announced - 05/21/10 05:44 PM

Is anyone planning on limiting the number of times an account holder can opt-in/opt-out from the ATM/debit card transactions?
Posted By: brainOverload

Re: Reg E Revisions Announced - 05/21/10 06:01 PM

Originally Posted By: John Burnett
Nope. Just make sure you step through the right disclosures, etc., if one of those seniors requests overdraft service for card transactions and you decide to give in.


Thanks John...management went the other way on the subject but I have another question:

We are changing the payment order of items due to these reg changes and I am trying to figure out if we need to send a notice to the customer 30 days prior to the effective date or within 30 days after or do we need to notify the customer at all?
Posted By: brainOverload

Re: Reg E Revisions Announced - 05/21/10 06:19 PM

Originally Posted By: cle
Is anyone planning on limiting the number of times an account holder can opt-in/opt-out from the ATM/debit card transactions?


I'm not sure you can limit that...I am courious to know myself.
Posted By: Busy body

Re: Reg E Revisions Announced - 05/21/10 08:03 PM

I have a question regarding the requirement for the notice to be segregated from other account disclosures. When July 1 rolls around and we start providing the notice as new accounts are opened, does this mean that we cannot included it in our account opening print group? How do we segregate it from all other disclosures. It will of course be on a separate page...is that sufficient?
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/24/10 02:27 PM

Originally Posted By: brainOverload
Originally Posted By: John Burnett
Nope. Just make sure you step through the right disclosures, etc., if one of those seniors requests overdraft service for card transactions and you decide to give in.


Thanks John...management went the other way on the subject but I have another question:

We are changing the payment order of items due to these reg changes and I am trying to figure out if we need to send a notice to the customer 30 days prior to the effective date or within 30 days after or do we need to notify the customer at all?


There is no regulatory requirement that you disclose posting order. The OTS's February 2004 Guidance on Overdraft Protection Programs is pretty forceful in suggesting, in the section on "Best Practices," that savings associations should "clearly disclose rules for processing and clearing transactions," and not administer or manipulate those rules unfairly to inflate fees. [70 FR 8431], and has issued proposed supplemental guidance that would cause omission of that information to be considered deceptive, and violative of the OTS's Advertising Rule.

The other regulators, in their February 2005 ODP Guidance document, stated that it's a Best Practice for banks and credit unions to clearly explain that transactions may not be posted in the order in which they occurred, and "that the order in which transactions are received by the institution and processed can affect the total amount of overdraft fees incurred by the consumer." [70 FR 9132]

It is not information that is required under Truth in Savings or Regulation DD, nor is it required by Regulation E. So, there is no "change in terms" notification that's mandated by a regulation. If you have, however, disclosed your posting order policy in the past, it's probably a good goal to inform consumers of the change. If if you have NOT provided the information in the past, if you can accurately and intelligibly explain the new posting order, you'll be looked upon favorably, I think, by your examiners.
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/24/10 02:32 PM

At some point, particularly if you're dealing with joint owners that cannot agree between them about overdraft service for card transactions, you'll want to have something in policy that suggests you not permit further opt-ins (you can never prevent someone from revoking an opt-in, but you don't have to accept an opt-in), or suggesting one owner set up a separate account if the two owners can't get their act together on the question.
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/24/10 02:37 PM

It's OK to include it with the other disclosures at account opening. It will have to be separate in the sense that it should be a separate sheet or a separate section of a booklet that is set apart from other information. Unlike the other Reg DD and Reg E account disclosures (which can be melded and even combined into a single information flow), these disclosures can't have other information inserted and must all be together. Conceptually, think of them as having a fence or border drawn around them.
Posted By: John Burnett

Re: Reg E Revisions Announced - 05/24/10 02:38 PM

Now, my friends, this thread has grown so huge and involves so many different topics related to the OD fees rule that I'm going to lock it down, and encourage you to post individual topics in separate threads.